Wave of Gulf IPOs coming in 2008

Experts expect a flood of initial public offerings (IPO) in the Gulf in 2008 and beyond following the massive success of two record listings in the last month, according to speakers at the Dubai International Financial Centre (DIFC) Week on Thursday.

The vast oversubscription and popularity of the MENA region's latest two IPOs, that of Dubai-based port container operator, DP World, and Egyptian real estate firm Talaat Mustafa Group, is indicative of future confidence in listings, a panel of experts agreed.

"We have just witnessed two huge IPOs in this region with the largest number of oversubscription ever. In the case of Tallat Mustafa Group the public placement was covered 41 times," said Dr Mohammed Omran. "We are certainly expecting to see more of the IPOs coming in this region," he said.

Omran, vice chairman, Cairo and Alexandria Stock Exchange, expected the boom in construction and telecommunications to lead the way.

"There is a big trend towards attracting more foreign direct investment (FDI)," he said. "This is going in the right direction."

Talaat Mustafa Group's initial public offering received applications for $5.4 billion (29.6 billion Egyptian pounds) worth of shares, 41.4 times the amount on offer, the company said on Wednesday.

When polled electronically, the audience of institutional investors displayed overwhelming confidence in the increase of IPOs in the region with 78% agreeing that more IPOs would hit the markets next year compared to 3% voting for less and 19% unsure.

There were greater calls for liberalization of the markets, in particular the opening of the Saudi market, the largest in the region.

"The most important market is Saudi which is closed. The next step is to open it in one way or another to international investors," said Dr Henry Azzam, pointing out government requirement for some companies in the Kingdom to go public in the next year already.

"Next year all petrochemical companies in Saudi must go public," said Azzam, CEO for Deutsche Bank, MENA region. "This is a bonanza for investment bankers."

Asked whether 2008 would be the year when family businesses in the Gulf will feel comfortable enough with the financial framework to make IPOs, the audience answered 68% no to just 38% yes.