Taking stock

  • Share via facebook
  • Tweet this
  • Bookmark and Share
Asiacell Communications — Iraq’s second largest mobile operator — aims to raise about $1.3bn from an IPO on the Iraq Stock Exchange

Asiacell Communications — Iraq’s second largest mobile operator — aims to raise about $1.3bn from an IPO on the Iraq Stock Exchange

Equity markets are still far from regaining the momentum that prevailed prior to the collapse of Lehman Brothers and the onset of the global financial crisis. In the Arab world, however, and in the Gulf in particular, there is some sanguinity that the inertia that has characterised markets for the past four years may be wearing off from an increase in initial public offerings in the region.

Globally the value of 795 IPOs reached $123.5bn last year, 27 percent lower than 2011 and the lowest since 2009, according to Dealogic. Facebook’s $16bn deal was 2012’s largest IPO and accounted for thirteen percent of volume. In the Middle East, IPOs raised about $2bn in 2012, more than double that of 2011 where listings recorded $843.9m, according to a survey by Ernst & Young. In the fourth quarter of last year, three listings raised $339.8m, compared with $226.1m in the same period in 2011.

“Drawing comparisons over the last two years we have noticed a steady climb in the amount of funds being raised by IPOs possibly hinting that markets are inching towards better results,” says Phil Gandier, Ernst & Young’s MENA Head of Transaction Advisory Services.

Saudi Arabia, which has the largest economy in the Middle East, led the country standings in 2012, raising $1.4bn from seven offerings, followed by the UAE with $277m, and Oman with $264.4m. In North Africa, Morocco and Tunisia were the only countries that also had listings.

Globally during the fourth quarter, US markets raised $7.3bn (29 IPOs), narrowing the lead on the Asian markets, which raised $8.8bn (59 IPOs). European exchanges also saw something of a return to form, with deal value reaching $7bn (20 IPOs). But overall the number of deals fell 46 percent from 255 deals in the final quarter of 2011 to 136 deals.

“The outlook for 2013 will be to a great extent influenced by investor sentiments, against the backdrop of regional developments. We are confident that Saudi Arabia and the UAE will continue to be the regional hubs of IPO activity for investors in 2013,” Gandier says.

It’s too early to gauge how the markets in Saudi and the UAE will pan out this year or foretell the quantity of share listings and receptiveness of investors. In December, Al Habtoor Group, controlled by billionaire Khalaf Al Habtoor, a scion of one of Dubai’s largest merchant family-run businesses unexpectedly postponed a planned share sale scheduled for this year. That would have been the largest deal to hit the market in Dubai, which hasn’t seen any listings since mid-2008 when Drake & Scull went public.

Another family-run firm, Daman Investments, also pulled the plug on recent plans to list. Daman, established in 1998, was initially planning to hold its IPO before the end of 2012. That will not happen anytime soon — the Dubai Financial Market is down more than 70 percent from its peak in 2008.

“I don’t think the market environment is conducive, liquidity is not there, the appetite is not there and investor sentiment is not there generally,” Daman CEO Shehab Gargash told Arabian Business last year. “We are on track and are about to begin phase two of our capital raise which will be at a premium over phase one,” he said.

Article continued on next page

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Blood on the bourse floor

Blood on the bourse floor

Arabtec’s share price collapse was the catalyst for a huge sell...

Taking stock

Taking stock

Gulf stock markets have seen a dearth of IPOs since the global...

Steering clear of the stock markets

Steering clear of the stock markets

Listing was all the rage three years ago, but IPOs have since...

Most Discussed
  • 12
    Has Narendra Modi already lost the plot?

    Modi was quiet all along and did not utter a word regarding the attacks on minorities and their institutions. It took Obama's address to him to atleast... more

    Saturday, 28 March 2015 2:25 AM - Ali
  • 11
    Nakheel PR: The toughest job in Dubai?

    On service charges.

    We were overcharged for years by Nakheel so that those loans could be paid back.

    The dramatic cuts have come to nothing... more

    Friday, 27 March 2015 7:32 PM - Pondersome George
  • 6
    Drunk passenger who slapped air stewardess jailed in Dubai

    Its high time airlines ban alcoholic drinks on board or limit it to just one drink. There are many passengers who love the free alcohol and keep drinking... more

    Saturday, 28 March 2015 2:25 AM - Azk