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Mena IPO values grow three-fold in Q1

Dubai, May 5, 2012

The capital markets in the Mena region raised $82.8 million in the first quarter of 2012, registering a more than three-fold jump compared to $21.7 million raised in the same period last year, said a report.

However, this was only 37 per cent of the $226.1 million raised in the fourth quarter last year, according to the new report compiled by Ernst & Young (E&Y).

In total, four regional IPOs came to market in the first quarter this year, the same number as in Q4 of 2011, the company said in its Mena IPO update.

Two IPOs came to market in Saudi Arabia while one each was reported in Tunisia and Morocco respectively. The largest issuance was of Saudi Takween Advanced Industries which raised $62.38 million, followed by Tokio Marine Saudi Arabia that raised $16 million.

The Moroccan and Tunisian IPOs were Afric Industries ($3.11 million) and Hexabyte ($1.31 million) respectively.

Commenting on the regional activity, Phil Gandier, Mena Head of Transaction Advisory Services, Ernst & Young, says: “Even though we have seen an improvement in the performance of regional bourses, this has not yet translated into a consistent increase in regional IPO activity.'

'The IPO markets have been very quiet since 2009 mainly due to lower than acceptable valuations than private and family businesses were willing to accept,' he remarked.

'Even though the IPO numbers have remained more or less flat, we are seeing a growing interest from such businesses. The strategic rationale of institutionalizing these companies and protecting them from succession issues by embarking on the IPO journey is as relevant as ever,' he stated.

'Improvements in the secondary markets have increased the prospects of better pricing for IPOs. This translates to a subsequent increase in the readiness to go public,' he added.

Phil said, 'Although the funds raised in the current quarter were still low by historical standards, provided we don’t see any major regional unrest, I think we are going to see an increase in funds raised in specific markets over the remainder of 2012.'

On the global scenario, the E&Y report said the IPO activity fell to the lowest level since second quarter of 2009.

So far this quarter, a total of 157 deals has raised only $14.3 billion, down by 69 per cent by capital raised ($46.6 billion in 296 deals), compared to the same period last year. This is the lowest quarter on record since the second quarter of 2009 when there were 82 IPOs worth $10.4 billion, it added.

Globally, this quarter was the first time when just one deal raised above $1 billion since the first quarter of 2009 when no IPOs exceeded $1 billion.

According to E&Y report, the average deal size dropped 42 per cent to hit $91 million compared to $157 million in the first quarter of 2011.

European stock exchanges raised $2.5 billion in 24 IPOs (18 per cent of global capital raised this quarter), due to hosting two of this quarter’s largest IPOs, of Dutch cable operator Ziggo, which listed on NYSE Euronext Amsterdam for $1.1 billion and Swiss market expansion services group, DKSH Holding’s $897 million listing on Swiss Exchange.

“The largest deal this quarter demonstrates that as we move further into 2012, there is a greater confidence in the capital market and the trend is slowly shifting towards companies floating a smaller percentage of their equity,” remarked Maria Pinelli, Global Strategic Growth Markets Leader at E&Y.

Commenting on the Asian scenario, the report said it was a slower start of the year in most of the exchanges in this region.

Despite a tough start of the year, Hong Kong, Shenzhen and Shanghai stock exchange were yet again among the top five global markets ranked by capital raised.

Out of the top 20 global IPOs this quarter, 8 were listed on Asian stock exchanges, and IPO activity in those markets accounted for 47 per cent of global IPO funds raised with 84 deals completed, raising $6.7 billion.-TradeArabia News Service




Tags: IPO | Mena | Saudi | Ernst & Young | issue |

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