UAE stock market capitalization increases by $5.79 billion in 2024 on strong IPO activity

CAIRO: The number of investors in the Middle East and North Africa venture capital ecosystem grew by 33 percent year-on-year in the first half of 2024, new data shows.

According to a report by investment data platform MAGNiTT, the rise in sentiment resulted in a 130 percent increase in the number of funds launched in the MENA region during the period.

The data revealed that despite an increase in investors, only $768 million in funding went to regional startups, down 34 percent year-over-year.

Total deals stood at 211, down 18 per cent on the first half of the year, while exits fell 63 per cent to just 10.

The sector that received the most funding was e-commerce, with $244 million, while the preferred industry in terms of number of transactions was financial technology.

Sanabil Investments, a Public Investment Fund subsidiary, turned out to be the most active investor in the region, investing $57 million.

Saudi startups raised the most funding in the first half of the year, with $412 million, followed by the UAE with $225 million and Egypt with $86 million. However, all of these markets saw declines of 7 percent, 19 percent and 75 percent, respectively.

Morocco and Kuwait rounded out the top five with $17 million and $14 million respectively.

In terms of the number of deals, the UAE topped the list with 83 deals, an 11 percent year-on-year increase. Saudi Arabia came second with 63 deals, a 3 percent drop, followed by Egypt with 28 deals, a 15 percent drop, and Morocco and Bahrain with 10 and 7 deals respectively.

In an interview with Arab News, Philip Bahoshy, CEO of MAGNiTT, explained that the second half of the year is expected to see an increase in activity from venture capitalists.

“In terms of trends, the broader MENA region, which includes both the UAE and Egypt, is likely to benefit from a very strong fourth quarter, while the third quarter is expected to be somewhat quieter,” he said.

“I think political stability is key from a macro perspective. Falling interest rates to bring liquidity back to markets are important, and conferences and events that can highlight the opportunities in the Middle East relative to other geographies will be very important to see the strength across the MENA region,” the CEO explained.

He added that the increase in transactions in the UAE is extremely positive.

“For early-stage investments, I anticipate they will continue to be positioned as one of the leading ecosystems for attracting international companies to establish and grow in the broader MENA region,” Bahoshy said.

“On the other hand, Egypt, which is constantly struggling with the local macroeconomic environment and the broader economy, will be looking to support early-stage startup investments and therefore will likely be ranked higher in terms of total number of deals,” he said.

He also explained that deploying capital in Egypt will continue to be a challenge as startups continue to move elsewhere to raise funding.

“I think both the UAE and Saudi Arabia are well-positioned to see further improvement in their ecosystems, despite the slowdown in the investment and macroeconomic environment we find ourselves in,” the CEO added.