Mideast IPO values plunge 95pc in Q1
Dubai, May 24, 2011
The value of initial public offerings (IPOs) in the Middle East plunged 95 per cent to their lowest level in five years during the first quarter, Ernst & Young said in a report on Tuesday.
Middle East firms raised only $21.7 million in the first-quarter of 2011, compared with $420.4 million in the year-ago period as regional unrest and underperforming stock markets weighed into investor appetite for fresh offerings, the report said.
Altogether, nine IPOs, expected to raise around $4.7 billion were postponed or withdrawn in Europe, Middle East and Africa region during March 2011, the largest monthly estimated volume since October 2008.
Abu Dhabi's Insurance House raised Dh66 million ($18 million) in an initial public offering in March, the first IPO in over two years in the United Arab Emirates. The Middle East Exchange Company in Syria raised $3.1 million.
'This downward trend could be reversed in the second quarter if some of the announced and open IPOs firm up their plans and choose to list,' Phil Gandier, Mena head of transaction advisory services at Ernst & Young said in the report.
Islamic insurer Wataniya's Dh82.5 million ($22.4 million) IPO launched on April 18 and was oversubscribed at least six times.
Investment banking fees in the Middle East slumped in the first quarter as political unrest in the region kept investors away from capital markets and crippled appetite for deals, data from Thomson Reuters showed.
Total investment banking fees for the first-quarter plunged 58 per cent to $48.8 million compared with $116.3 million for the previous year.
Gregory K Ericksen, global vice chair for Strategic Growth Markets for Ernst & Young, said: “Recent turmoil in the Middle East and Japan has unsettled broader stock market indexes, spooked investors, and slowed down the pace of new issuances in March."
"However, investors have been waiting for some time now to invest their capital, and the IPO market is still open for the right growth story and realistic valuation.” – Reuters & TradeArabia News Service