By Andrew White
IPOs in Q1 raised $6.8bn through 62 issues, compared to $3.7bn in Q1 2009.
Initial Public Offering (IPO) activity in the Middle East and North Africa region rose significantly in the first quarter of 2010, according to a new report.
The volume of funds almost doubled compared to the corresponding period last year, according to a study by asset management firm Al Masah Capital.
Regional IPOs in the first quarter of the fiscal year raised $6.8bn through 62 issues, compared to $3.7bn in Q1 2009 through 29 issues, signaling a strong recovery in the IPO market, the firm said.
"As the global economic recovery strengthens, MENA region is likely to witness larger issues driving the future IPO market activity in the region," Shailesh Dash, founder of Al Masah Capital, said in a statement.
"Companies in the region will be eager to enter the IPO market as investor appetite grows stronger,” he continued. “Moreover, some regional indices that plummeted at the start of 2009 have rebounded since September 2009 and renewed investor interest in the stock markets is expected to increase momentum in regional IPO markets this fiscal."
According to Al Masah, the MENA IPO market had withered in 2009 as the economic slowdown cast a shadow on markets across the globe from 2008-end. It managed to raise a mere $12.8bn from 191 IPOs, a decline of 82 per cent year-on-year in absolute figures.
Since then, however, the main driver of growth in the MENA IPO market has been government initiatives aimed at diversification to reduce dependence on the oil sector.
According to Al Masah the UAE leads in value terms with $25.3bn worth of IPOs planned in 2010, followed by Bahrain with $3.8bn and Saudi Arabia with $1.03bn. Egypt unveiled plans to come up with two IPOs in the financial services and transportation sectors, for a total of $1bn, Al Masah said, with the four countries expected to account for the majority of MENA IPO activity in 2010.
According to the report Saudi Arabia has the highest number of announced IPOs from the 2010 pipeline, accounting for 47 out of the total 106 announced issues in the region. Planned IPOs span various sectors such as telecommunications, construction and real estate.
The UAE follows with 25 IPOs, mostly from the real estate sector, whereas Bahrain and Kuwait announced six and five IPOs, respectively.