Mena IPO value down 45pc in Q3
Dubai, October 9, 2013
The capital markets in the Mena region raised $138 million in the third quarter, down 45.3 per cent when compared to $252.3 million raised in the same period last year, said a report.
According to 'Ernst & Young’s Mena Q3 2013 IPO Update,' the only issue in Mena region took place in Oman by Sembcorp Salalah Power and Water Company in the power and utilities sector.
Commenting on the results, Phil Gandier, the Mena head of Transaction Advisory Services said: "The third quarter is historically a slow period for IPOs. This year, the summer months coinciding with Ramadan led to a slower paced environment for raising money for IPOs."
"However, we have seen an increase in the number of companies in the region contemplating IPOs in the coming months so we expect activity to pick up," he noted.
In the third quarter of 2012, there was only one IPO in Saudi Arabia with the listing of City Cement on the Tadawul exchange for $252.3 million.
According to Gandier, there is an appetite to invest in profitable local companies that have scale and Pan Arab operations.
"Within the Gulf, the Tadawul is expected to attract a large number of IPOs due to its high liquidity and the new facility of cross-listing for overseas companies. Additionally, the UAE has also been promoting inward investment and continues to play a key role in attracting investment to the region," he stated.
The Gulf region as a whole has many of the investment qualities that companies look for such as solid fundamentals and strong demographic trends, he noted.
"Going forward, the key challenge that the regional IPO market will face is the relatively lower levels of liquidity in the exchanges compared to international markets. The choice of other exchanges and valuation differential may also present a challenge for the regional exchanges, although this will depend on the sector and ‘go-to-market’ credentials of individual companies," said Gandier.
"However, the increased number of announcements is an indication of the positive direction the IPO market is headed in. We expect the market to pick up in the coming years as more and more companies proceed along the IPO journey and regional and global investors look towards the region for investment opportunities, he added.-TradeArabia News Service