24 July 2008
The Middle East capital markets raised $4.72 billion (Dh17.3bn) from 13 IPOs in the second quarter of 2008 compared to $3.9bn in the same period in 2007, showing that the region remains resilient to global economic uncertainty for now, according to a report.
The capital raised was 20 per cent higher than amounts raised in the first quarter of 2008.
Global advisory services firm Ernst & Young said in a report that the trend in the regional market is fewer, but larger IPOs. IPOs continue to be oversubscribed in most instances, which reflects the continued appetite for IPOs in the market, for now.
Globally, the size of IPOs in first half of 2008 was half as much as in the same period in 2007 and much less than in 2005 and 2006.
The largest IPO in the region was Saudi Arabia's Al Inma Bank in the second quarter of 2008 raising $2.8bn, which amounted to 60 per cent of the total funds raised. Other Saudi companies - Rabigh Refining and Petrochemical Company and Mobile Telecommunications Company Saudi Arabia - combined accounted for 75 per cent of the capital raised in the first quarter of 2008.
Other large IPOs in the region included Mohammad Al Mojil Group with $559.94 million. The UAE's Depa United Group raised $432.3m, followed by two Egyptian companies - Palm Hills Developments with $348.22m and Maridive and Oil Services with $272.93m.
Azhar Zafar, Head of Mergers and Acquisitions, Ernst and Young Middle East, said: "There were 52 IPOs during 2007 and in the first half of 2008 there have been 26. The total capital raised in the first half of 2008 amounted to $8.69bn compared to $4.83bn from 33 IPOs during the same period last year." Phil Gandier, Head of Transaction Advisory Services for Ernst and Young Middle East, said: "Although the drop in number and amount of capital raised in IPOs has been more severe in mature global markets, the region has shown resilience as a result of liquidity created on the back of continuously increasing oil prices .
He said the expectations for the rest of the year remain optimistic due to the large number of announced and to-be-announced IPOs.
"Companies that have either withdrawn or postponed their IPOs would revisit going public once they realise that market conditions in the Middle East region are less fraught with the uncertainty that is persisting in other regions," he said.
Globally, the size of IPOs taken for two quarters on aggregate was roughly half as much as the 2007 while more IPOs have been postponed or withdrawn in the first six months of 2008 (177) than in all of 2007 (169). In the second quarter of 2008, a total of 258 IPOs worldwide raised $37.4bn in capital. This compares with 247 IPOs worth $41.2bn billion in the previous quarter.
However, compared with the same quarter in 2007, total capital raised fell by 59 per cent (from $90.4bn to $37.4bn) and the number of deals more than halved (from 567 to 258). The Bric states (Brazil, India, China and Russia) accounted for 76 deals worth $11.8bn in the second quarter.
Emerging markets continued to drive activity in the second quarter with China leading the way in both value ($6.2bn) and volume (56 IPOs). Seven of the top 10 and 15 of the top 20 IPOs by capital raised were from emerging markets.
Four countries accounted for half of the capital raised globally: China ($6.2bn); Brazil ($4.6bn); United States ($4.3bn); and Saudi Arabia ($3.4bn).
The most active countries in terms of number of deals were China (56); Poland (21); and Australia, South Korea and India (17).
The Middle East capital markets raised $4.72 billion (Dh17.3bn) from 13 IPOs in the second quarter of 2008 compared to $3.9bn in the same period in 2007, showing that the region remains resilient to global economic uncertainty for now, according to a report.
The capital raised was 20 per cent higher than amounts raised in the first quarter of 2008.
Global advisory services firm Ernst & Young said in a report that the trend in the regional market is fewer, but larger IPOs. IPOs continue to be oversubscribed in most instances, which reflects the continued appetite for IPOs in the market, for now.
Globally, the size of IPOs in first half of 2008 was half as much as in the same period in 2007 and much less than in 2005 and 2006.
The largest IPO in the region was Saudi Arabia's Al Inma Bank in the second quarter of 2008 raising $2.8bn, which amounted to 60 per cent of the total funds raised. Other Saudi companies - Rabigh Refining and Petrochemical Company and Mobile Telecommunications Company Saudi Arabia - combined accounted for 75 per cent of the capital raised in the first quarter of 2008.
Other large IPOs in the region included Mohammad Al Mojil Group with $559.94 million. The UAE's Depa United Group raised $432.3m, followed by two Egyptian companies - Palm Hills Developments with $348.22m and Maridive and Oil Services with $272.93m.
Azhar Zafar, Head of Mergers and Acquisitions, Ernst and Young Middle East, said: "There were 52 IPOs during 2007 and in the first half of 2008 there have been 26. The total capital raised in the first half of 2008 amounted to $8.69bn compared to $4.83bn from 33 IPOs during the same period last year." Phil Gandier, Head of Transaction Advisory Services for Ernst and Young Middle East, said: "Although the drop in number and amount of capital raised in IPOs has been more severe in mature global markets, the region has shown resilience as a result of liquidity created on the back of continuously increasing oil prices .
He said the expectations for the rest of the year remain optimistic due to the large number of announced and to-be-announced IPOs.
"Companies that have either withdrawn or postponed their IPOs would revisit going public once they realise that market conditions in the Middle East region are less fraught with the uncertainty that is persisting in other regions," he said.
Globally, the size of IPOs taken for two quarters on aggregate was roughly half as much as the 2007 while more IPOs have been postponed or withdrawn in the first six months of 2008 (177) than in all of 2007 (169). In the second quarter of 2008, a total of 258 IPOs worldwide raised $37.4bn in capital. This compares with 247 IPOs worth $41.2bn billion in the previous quarter.
However, compared with the same quarter in 2007, total capital raised fell by 59 per cent (from $90.4bn to $37.4bn) and the number of deals more than halved (from 567 to 258). The Bric states (Brazil, India, China and Russia) accounted for 76 deals worth $11.8bn in the second quarter.
Emerging markets continued to drive activity in the second quarter with China leading the way in both value ($6.2bn) and volume (56 IPOs). Seven of the top 10 and 15 of the top 20 IPOs by capital raised were from emerging markets.
Four countries accounted for half of the capital raised globally: China ($6.2bn); Brazil ($4.6bn); United States ($4.3bn); and Saudi Arabia ($3.4bn).
The most active countries in terms of number of deals were China (56); Poland (21); and Australia, South Korea and India (17).
By Gopal Bhattacharya
© Emirates Business 24/7 2008
