Middle East IPOs slump in Q3 amid global uncertainty

Ernst & Young says companies likely to continue to put off plans to go to market in Q4
Middle East IPOs slump in Q3 amid global uncertainty
Dubai stock market
By Andy Sambidge
Sun 16 Oct 2011 06:08 PM

Capital markets in the Middle East and North Africa raised $218.9m in initial public offerings in the third quarter of the year, down nearly 40 percent on the previous quarter.

The figure represented a 23.6 percent increase on the same period last year, according to Ernst & Young's Q3 MENA IPO Update.

The report said Saudi Arabia was the only country in the region to witness any IPO activity in Q3, with two listings on the Tadawul.

United Wire Factories of Saudi Arabia ($88.3m) was listed in August 2011 and Hail Cement Company ($130.5m) was listed in September 2011, Ernst & Young added.

Phil Gandier, MENA head of transaction advisory services, Ernst & Young, said: "The listings in Saudi Arabia are an exception to the lack of IPO activity in the key MENA capital markets.

"Investors in the region are still uncertain of what fair value is due to the follow-on effect of the EU debt crisis and the slowdown in the US. This is increasingly becoming true for almost all asset classes, including equity and IPO pricing."

He added: "Companies have had to postpone going to market since 2009 and will continue to do so this year. Investors are again looking for safety as uncertainty is set to continue in the fourth quarter.

"Predictions of listings, even in the low single digits, may not necessarily hold for the next quarter, however the pipeline of companies waiting for their IPOs is building up."

Global IPO activity fell sharply in Q3, with a total of 284 deals raising $28.5bn - down 57 percent on the year earlier period.

Only three deals raised over $1bn and the average deal size decreased in many markets in Q3 compared to Q2.

Maria Pinelli, global strategic growth markets leader at Ernst & Young said: "The third quarter results show that the Eurozone and US debt crisis have had a deep impact on the IPO market and on both issuers and investors' confidence."

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