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2007 set to see greater IPO activity

DUBAI — This current year is expected to be see greater initial public offering (IPO) activity than ever before, with the Middle East continuing to increase the volume of activity.

"Personally I expect 2007 to be the best year ever for IPOs," said Omar Bitar, Ernst & Young's managing partner, business advisory solutions, Middle East.

"The entire (Middle East) region will have continuous activity", he added. "The outlook is very positive especially because of Saudi Arabia. The number and size of IPOs will bypass the rest of the region." He said that Saudi Arabia will "show more of its potential," outpacing other parts of the Gulf. "Until now the UAE has shown (its potential) more than Saudi Arabia," he said.

The Saudi Arabian Capital Market Authority (CMA) will announce five IPOs after Eid — the Commercial Union for Cooperative Insurance, Al Saqr for Cooperative Insurance Arabian Cooperative Insurance, Al Khaleej Training and Education and Middle East Specialised Cables, for which Ernst & Young is an adviser. A total of around 38.9 million shares will be offered to institutional and individual investors between October 27 and November 12.

During the first two to five days the offering will be made available to institutional investors who will bid for a specific portion of the IPOs, explained Saudi-based Bitar. The success of this "will determine the portion and price at which it will go to private investors."

"There are multiple IPOs coming out and the fact they are being authorised is a good sign," he continued. They reflect the increasing maturity of the capital markets in Saudi Arabia, improving regulation and high levels of liquidity in the region. He also commented that the "CMA is able to manage the capital markets in a much better way now. It is addressing lots of issues concerning investors. The payback is coming now," he said, adding that the market is also benefiting from increased investor awareness.

Ernst & Young is collating data for its third quarter IPO report. For the first half of the year, Middle East has clocked up 20 IPOs, worth $3.9 billion. Eleven of these were in Saudi Arabia.