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Tue 16 Oct 2007 11:15 AM

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Investor demand drops for Gulf IPOs

Gulf initial public offerings fell 4% in first nine months to $5.9bn, especially in Qatar, Kuwait and Bahrain.

Gulf Arab initial public offerings (IPOs) fell 4% in the first nine months to $5.9 billion as investor demand declined, especially in Qatar, Kuwait and Bahrain, Abu Dhabi-based private equity firm Gulf Capital said.

On average, investors offered 6.1 times more - or $1.3 billion per sale - than companies were seeking to raise during the nine months to September 30, compared with almost 47 times more in the year-earlier period, Gulf Capital said in a report.

It also cut its forecast for the value of announced and manager-assigned IPOs for the following three years to $7.9 billion, compared with $18.7 billion expected six months ago.

Gulf Arab companies raised $6.2 billion in the first nine months of last year, led by Saudi Arabia and the UAE, and $7.5 billion in all of 2006, Gulf Capital said.

The average size of IPOs fell 38% to $227 million during the first nine months of this year, it said.

Companies in Saudi Arabia raised the most - $3.69 billion versus $2.35 billion in the year-earlier period.

But Kuwaiti companies raised nothing and sales in Qatar fell to $389 million compared with $1.32 billion in the year-earlier period, Gulf Capital said.

Saudi stocks sold this year and last year on average appreciated almost five-fold after listing. They almost tripled in Oman and more than doubled in the UAE, Gulf Capital said.

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