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Sun 28 Aug 2011 06:48 PM

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MENA IPO activity slumps 51% in Q2 - Ernst & Young

Capital markets in the region raised $374.77m in second quarter amid lack of investor confidence

MENA IPO activity slumps 51% in Q2 - Ernst & Young
DFM, Dubai investors, Dubai stock market, Dubai IPO

Capital markets in the MENA region raised $374.77m through initial public offerings (IPO) in the second quarter of 2011, down more than 50 percent on the same period last year.

According to Ernst & Young's Q2 2011 MENA IPO update, the performance was still an improvement from the lows of $24.14m raised in the previous quarter.

A total of $398.91m has been raised in the regional capital markets in the first six months this year compared to $1.203bn in the first half of 2010, a decline of 66.84 percent, Ernst & Young said in a statement released on Sunday.

Phil Gandier, MENA head of transaction advisory services, Ernst & Young said: "The lack of any trend in the regional IPO market is underlined by the lack of confidence to list in these conditions.

"Fluctuation in funds raised every quarter is only a function of the strength and stability of the listed companies. It's likely that the next quarter may also see firms listing in the low single digits."

He added that the Middle East has seen 225 companies delay their offers or postpone going to market over the last three years.

"These companies would proceed with listing as the market sentiment improves and fund raising via the capital markets picks up," he said.

Global IPO fundraising activity rose by 39 percent in the second quarter compared to the first quarter of 2011, and has increased by 38 percent compared to the second quarter of 2010, the report said.

In Q2 2011, 378 IPOs globally raised a total of $64.6bn, according to Ernst & Young, with Asian exchanges still dominating listings this quarter, with 163 IPOs raising $27bn.

European exchanges saw a huge 534 percent rise in capital raised in Q2 ($17.7bn raised in 95 IPOs) compared to the first quarter ($2.8bn raised in 54 deals) thanks to Glencore's listing in London.

Maria Pinelli, global vice chair for strategic growth markets for Ernst & Young, said: "Despite the continued uncertainty of a global economic recovery, the IPO remains at the heart of many companies' growth strategy.

"As the global IPO pipeline continues to build up, we expect a strong second half for new offerings from high profile issuers, notably from the US and Europe."

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