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Mena IPO values surge 134pc to $2bn

Dubai, December 23, 2012

The regional capital markets in the Middle East and North Africa region raised $2 billion in 2012 up from $843.9 million last year, thus registering a 134 per cent growth, said a report.

The year closes with regional companies raising a total of $339.8 million through three initial public offerings (IPOs) in the fourth quarter, according to Ernst & Young’s Mena Q4 and year-end 2012 IPO update.

This is significantly higher than the $226.1 million raised in the fourth quarter last year and the $252.3 million raised in the third quarter of this year, it added.

Phil Gandier, the Mena head of Transaction Advisory Services, E&Y said, “It’s been an eventful year for the region, with mixed implications for the capital markets. Drawing comparisons over the last two years we have noticed a steady climb in the amount of funds being raised by IPOs possibly hinting that markets are inching towards better results."

"The outlook for 2013 will be to a great extent influenced by investor sentiments, against the backdrop of regional developments. We are confident that Saudi Arabia and the UAE will continue to be the regional hubs of IPO activity for investors in 2013," he added.

According to E&Y, Saudi Arabia led the country standings in 2012, raising $1.4 billion through seven IPOs in all of 2012, followed by the UAE with $277 million and Oman with $264.4 million. Morocco and Tunisia were the only other Mena countries with IPO activity in 2012.

Dallah Healthcare Holding Company led regional IPO deal sizes with its $143 million listing on the Saudi Stock Exchange (Tadawul) in November followed by Al Izz Islamic Bank at $106 million on the Muscat Securities Market in September.

The third IPO in Q4 was Amira Nature foods listing on the New York Stock Exchange (NYSE) at $90 million in October, it added.

Gandier said, “When we look back at the sector split of the IPOs that have taken place in 2012 we can see a broad spread of coverage where five were in the Materials sector, followed by three each in the Financial and Consumer Products sectors, two in the Healthcare sector and one IPO in the Packaged Foods Sector.”

In the fourth quarter, the US markets raised $7.3 billion (29 IPOs), narrowing the lead on the Asian markets, which raised $8.8 billion (59 IPOs). European exchanges also saw something of a return to form, with deal value reaching $7 billion (20 IPOs).

Globally, the year-on-year, the picture for Q4 remains somewhat depressed. The number of deals fell 46 per cent from 255 deals in the fourth quarter of 2011 to 136 deals in Q4 2012, whereas by capital raised, it only fell 6 per cent from $29.1 billion in the same period last year to $27.3 billion this quarter.

Maria Pinelli, E&Y’s Global Vice Chair Strategic Growth Markets said, "The weakening economy, unstable equity market conditions and poor performances on some IPO transactions undoubtedly impacted investors’ confidence. As expected, there has been lower IPO activity in Asia as the number of state owned enterprises (SOEs) coming to market has diminished."

"The fourth quarter figures show that the US IPO market is back by deal number and rewarding companies that perform strongly. Europe has significantly increased activity in the fourth quarter, compared to the rest of the year," Pinelli stated.

On the IPO market outlook, Pinelli said, “Looking ahead to 2013, we expect a better outlook, with a strengthening US economy leading the recovery, followed in the latter half of the year by Europe and Asia. Reduced stock market volatility, assertive action from central banks and brighter economic prospects suggest 2013 could be the right time for companies currently in the pipeline to list."

"The US, Toronto, London, Frankfurt, and Moscow stock exchanges lifted significantly in the fourth quarter, thus suggesting that signs of stability in equity markets and supportive central bank policy are starting to take effect," she said.

"We believe the market is likely to see smaller offerings initially while market and investor confidence builds. As the global IPO marketplace ceases to be characterized by the sale of SOEs, whichever economy provides the most effective support to commercial, entrepreneurial businesses will become the largest capital market in the world," she added.-TradeArabia News Service

Tags: IPO | UAE | Middle East | Saudi |

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