Tuesday, Jan 03, 2012
DUBAI (Zawya Dow Jones)--Fundraising through initial public offerings in the Middle East and North Africa fell 69.3% in 2011 as the euro-zone debt crisis undermined investor confidence worldwide and regional companies often showed a preference for Islamic finance as an alternative funding source, a report from Ernst & Young said.
Regional capital markets raised $843.9 million in 2011, a 69.3% decline compared to $2.8 billion in 2010. Global fundraising was down 45% in 2011. In the MENA region, there were five initial public offerings in both the industrial manufacturing and financial sectors, two in telecommunications and one IPO in each of the power and utilities, real estate and retail sectors.
"Companies chose other fundraising routes over IPOs in 2011, which was another year of low capital market activity. Low investor interest continued in the MENA region as companies chose Islamic funding such as sukuk, which saw a record year, as the preferred route for fundraising," said Phil Gandier, MENA Head of Transaction Advisory Services at Ernst & Young.
The sovereign debt crisis in Europe is considered the main culprit for the subdued capital markets activity, Ernst & Young said. Looking forward, investors and issuers are likely to remain concerned about the markets' volatility during the next quarter.
"The key to the IPO market recovery lies in the speedy resolution of the European debt crisis, which is likely to have a stabilizing effect on the global capital market and restore investors' confidence," said Maria Pinelli, Global Vice Chair, Strategic Growth Markets at Ernst & Young.
The largest regional IPO of 2011 was the U.A.E.'s Eshraq Properties Co. which raised $229.1 million. Overall, Saudi Arabia led the country standings in 2011 raising $460.5 million.
-By Nicolas Parasie, Dow Jones Newswires; +9714 446-1681; nicolas.parasie@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
03-01-12 1144GMT
