Mena IPO value up 24pc in Q3
Dubai, October 16, 2011
The value of initial public offerings (IPOs) in the Mena region surged 23.6 per cent to $218.9 million in the third quarter compared to $177.04 million last year, according to a report by Ernst & Young.
E&Y in its IPO update pointed out that Saudi was the only country in the region to witness IPO activity during the period with two listings on the Tadawul.
United Wire Factories which was listed in August netted $88.3 million, while Hail Cement Company listed in September raised $130.5 million, the E&Y said in its report.
Phil Gandier, Mena head of Transaction Advisory Services, E&Y said the regional IPO volumes were however down 39 per cent from the $335.05 million raised in the previous quarter.
On the Saudi activity, Gandier said the listings were an exception to the lack of IPO activity in the key Mena capital markets.
'Investors in the region are still uncertain of what fair value is due to the follow-on effect of the EU debt crisis and the slowdown in the US. This is increasingly becoming true for almost all asset classes, including equity and IPO pricing,' he explained.
According to Gandier, companies have had to postpone going to market since 2009 and will continue to do so this year.
'Investors are again looking for safety as uncertainty is set to continue in the fourth quarter,' he remarked.
'Predictions of listings, even in the low single digits, may not necessarily hold for the next quarter, however the pipeline of companies waiting for their IPOs is building up,' Phil added.
With regard to the global scenario, the IPO activity fell sharply in third quarter. So far this quarter, a total of 284 deals raised $28.5 billion down 26 per cent compared to 383 IPOs worth $65.6 billion for the second quarter, said the E&Y report.
This quarter globally, only three deals raised over $1 billion, the report added.
The average deal size decreased in many markets during the third quarter compared to the last quarter. The global average deal size was $100 million compared to $171 million last quarter.
Maria Pinelli, global strategic growth markets leader at E&Y, said the third quarter results show that the Eurozone and US debt crisis have had a deep impact on the IPO market and on both issuers and investors’ confidence.
'There are, however, many very good businesses still waiting to go public. Companies have not stopped seeing IPOs as a way of raising capital. They are waiting for markets conditions to improve, while continuing to prepare for their IPO,' he added.-TradeArabia News Service