Middle East 'still strong' on IPOs - report

IPO SUCCESS: Investors have helped the Middle East region to buck the global downturn. (Getty Images)

Middle East markets resisted the dramatic global downturn in the IPO market by raising $3.61 billion in the third quarter of 2008 from 12 initial public offerings (IPOs), latest figures show.

Although capital raised was down 23 per cent in the region than in the previous quarter ($4.72 billion from 13 IPOs), regional markets fared much better compared to global markets.

Funds raised globally were down 66 per cent and there have been 108 fewer deals, the lowest activity level seen since 2003, following the dotcom collapse, according to the quarterly Global IPO update from professional services firm Ernst & Young.

Five IPOs from the Middle East entered the list of top 20 global IPOs by funds raised in the third quarter.

The Saudi Arabian Mining Company IPO was the largest in the world by capital raised with $2.467 billion.

Other regional IPOs in the top 20 list by capital raised included the UAE's Drake & Scull with $333 million, the UAE's Damas International with $226 million and two Saudi companies - Astra Industrial Group with $248 million and Methanol Chemicals/CHEMANOL with $193 million.

Azhar Zafar, head of Mergers and Acquisitions, Ernst & Young Middle East, said: "Saudi Arabia was placed second globally in terms of funds raised by any country with $3 billion, equalling 23 per cent of the global IPO market."

China and Australia were placed first and third with 25 per cent ($3.3 billion), and 10 per cent ($1.3 billion) respectively.

The UAE came in second in the MENA region with US$600 million, equivalent to 5 per cent of global capital raised.

From the total IPOs, Saudi Arabia hosted three of the IPOs while the UAE hosted two IPOs. However, the leader in the number of IPOs in the region was Jordan with six.

Phil Gandier, managing partner, Transaction Advisory Services, Ernst & Young Middle East, added: "It is interesting to note that the deal threshold to make the global top 20 has fallen significantly since 2007 when the minimum deal value required to make the group was $1.9 billion; this quarter it was $119 million.

"However, the region is dealing with the global downturn much better than anticipated. While short-term performance will be affected, long-term outcomes are still looking positive."

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