Gulf firms eye IPOs, await better market
Dubai, May 22, 2012
Up to a dozen retail-focussed family groups in the Gulf region are ready to go public once global market conditions improve, HSBC said, a move that would give investors access to the fast-growing consumer goods sector.
The flow of initial public offerings from the Middle East, both on local and international exchanges, has been moribund in recent years as volatile markets put off potential issuers.
'We've got between half-a-dozen to a dozen family groups with retail operations in the (GCC) who are waiting to list in locations around the world when market conditions improve,' Nicholas Levitt, the HSBC head of commercial banking in the UAE told reporters.
'Probably the biggest bottleneck at the moment is a lack of confidence in the capital markets, as opposed to a lack of confidence in retailing.'
Anecdotal evidence puts the aggregated average growth rate of retailers in the Gulf at around 15 per cent per annum, Levitt added.
Given the region's favourable demographics - a significant proportion of the population under the age of 30 and burgeoning wealth - the consumer goods sector is seen by institutional investors as offering some of the best growth opportunities in the Gulf region.
Coca-Cola said in December it was paying $980 million for a stake in Saudi Arabia-based beverage company Aujan Industries, the largest-ever investment by a multinational firm in the Middle East's consumer goods sector.
One IPO known to be in the pipeline is Health Water Bottling Company, a beverage company owned by Saudi Arabian conglomerate Olayan Group, who could sell 30 per cent to the public in the first quarter of 2013, sources said in April.
The recent unfavourable equity markets had forced some regional firms to turn to private investment.
Axiom Telecom sold a 35 per cent stake to Qatar's Mannai Corp after abandoning an IPO in December 2010 which would have valued the Dubai-based mobile phone retailer at nearly $1 billion.-Reuters