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Thu 11 Dec 2008 07:59 AM

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Global IPOs plummet as companies delay listings

Economic crisis sends IPOs dropping to their lowest level since 1995, says report.

The number of initial public offerings (IPO) worldwide has plummeted since 2007, with nearly 300 proposed IPOs cancelled or delayed due to the economic downturn, latest figures reveal.

Only 745 IPOs were recorded worldwide in the first 11 months of 2008, raising $95.3 billion in capital, compared to 1,790 over the same period a year ago, which raised $256.9 billion, the Ernst & Young’s year-end Global IPO report revealed.

In the Middle East and North Africa region, a total of $15.9 billion was raised through IPO, primarily driven by Saudi Arabia where up to 80 firms, Saudi Arabian Airlines, Saudi Railways Organisation, Al-Tayyar Travel, Al-Rabea Foods and Zamil Holding Company, have reportedly delayed IPOs.

In October, Arabian Business reported that two Dubai companies had received approval to list on the Dubai Financial Market (DFM) but were waiting for the market to stabilise.

In the first nine months of the year, there were eight IPOs in the UAE with a total value of $1.2 billion.

In Saudi Arabia, 13 IPOs raised $9.7 billion in the same period.

Asian IPOs have generated the most capital this year to date ($29.7 billion) with Greater China accounting for 60 percent of funds raised in this region.

North America raised $27.0 billion while the most active regions were Asia (337 IPOs), Europe (161) and North America (91).

Full-year figures for 2008 are expected to follow this downward trend, and will compare with a record-breaking 1,979 deals and $287.1 billion in capital raised over 2007.

However, despite a slowdown in actual listings, “the pipeline of companies preparing to make the transition from private entity to public enterprise remains robust,” said Gil Forer, global director of IPO initiatives at Ernst & Young.

“Challenging market conditions have clearly impacted investor confidence and willingness to list at this present time,” he added.

Data from Dealogic showed that 298 IPOs have been postponed or withdrawn in 2008 to date compared with 167 during the full year 2007.

IPO activity is at the lowest level recorded over the same 11-month period since 1995.

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