Middle East IPOs plunge to lowest level in five years

Total value of listings plunges 94.8% in first quarter, Ernst & Young says
Middle East IPOs plunge to lowest level in five years
IPO INTEREST: The value of initial public offerings (IPO) in the Middle East plunged 94.8 percent in the first quarter of 2011 (Getty Images)
By Claire Ferris-Lay
Wed 25 May 2011 04:50 PM

The value of initial public offerings (IPO) in the Middle East plunged 94.8 percent in the first quarter of 2011, the lowest in five years, Ernst & Young has said.

The total value raised in regional IPOs during the first quarter was $21.7m down from $420.4m for the same period the previous year as investor sentiment remained weak. Nine sales were cancelled or postponed in the wake of the political turmoil.

 “Besides the significant developments across the region, the main factor driving the market down has been weak investor sentiment due to underperforming stock markets and risk aversion,” Phil Gandier, MENA head of transaction advisory services for Ernst & Young, said in a statement.

Stock markets in the Arab world have plummeted in the wake of the political turmoil. Overall loses on Egypt’s bourse reached 25.9 percent on Tuesday.

The Middle East had only two IPOs during the first quarter of the year. Syria’s Middle East Company in Syria raised $3.1m while the Insurance House in Abu Dhabi raised $18.6m.

The IPO market could turn around in the second quarter, said Gandier. “This downward trend could be reversed in the second quarter if some of the announced and open IPOs firm up their plans and choose to list,” he said.

“The IPOI of the National Takaful Company (Wataniya) in the UAE, which came in the second quarter and was oversubscribed seven times, demonstrates that investors may have begun warming up to the primary markets,” he added.

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