Mideast IPO market down 9pc
Dubai, September 27, 2010
The Middle East IPO market recorded a 9 per cent decrease in the first half of this year compared to the same period last year, according to a report.
The market maintained a low level of activity with 11 small-sized IPOs worth a total of $1 billion going through in the first half of this year, said the Ernst & Young’s H1 Middle East IPO update.
Similar to 2009, the IPO market was dominated in the first half of 2010 by Saudi insurance companies as local regulations required they go public within a certain timeframe.
New listings are being launched at a slower than expected pace due to continued economic uncertainty and dampened investor confidence. Over 100 IPOs have been announced for the second half of 2010, but only a few are likely to come through this year, it said.
However, regional IPO markets have shown an increase for the second quarter in a row this year. According to the update, there was a 40 per cent increase in total capital raised in Q2 ($590.6 million) compared to Q1 ($420.5 million).
Phil Gandier, Mena transactions leader, said: “Though the numbers are not at pre-crisis levels, the trend seems to indicate a movement away from the lower end of the market cycle. In the last three quarters IPO activity was mainly seen in Saudi Arabia, Jordan, Qatar, Egypt and Syria. To really be on a path to recovery, we need to see new companies reaching out to investors in the other regional markets as well.”
The Middle East’s largest IPO in Q2 2010 was Saudi-based Knowledge Economic City Company. It raised $272.0 million, 46 per cent of the regional total. The other four IPOs included that of Egypt-based Juhayna Food Industries ($176.4 million), Saudi-based Al Hassan Ghazi Ibrahim Shaker Company ($137.2 million) and Syrian Cham Exchange Company ($2.7 million) and United Exchange Company ($2.4 million).
Phil adds: “The regional IPO market has shown some signs of life on the back of increased Saudi investor confidence and companies in the insurance sector seeking funds. Unless sentiments improve, we believe the number of IPOs in the region will remain at similar levels.” – TradeArabia News Service