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Mideast IPO Market Continues Slide in Q3

DUBAI — The initial public offering, or IPO, activity in the Middle East continued to decline in the third quarter on recovery concerns.

A total of four companies listed in the region during third quarter, raising $871.79 million compared to five IPOs accounting for $1.021 billion in the previous quarter while 14 IPOs raised $3.74 billion during the third quarter last year, according to Ernst & Young Middle East, an advisory firm.

“Companies are still wary of the strength of the recovery in the region,” Phil Gandier, Managing Partner, Transaction Advisory Services, Ernst & Young Middle East, said.

A total of $1.97 billion has been raised in Middle East IPOs in the first three quarters of 2009 compared to $12.44 billion in same period last year. “Whilst the market may not change significantly during the remainder of this year, once there is evidence of a sustained recovery in the region, there is likely to be an increase of fund-raising on the regional stock markets, and the 152 announced, delayed or rumoured IPOs would be anxious to list,” 
Gandier said.

Three IPOs in Saudi Arabia and one in Syria raised a total of $871.79 million. National Petrochemical Company of Saudi Arabia was the largest regional IPO, raising $640.85 million followed by the Saudi Steel Pipe Co. with $106.81 million. Saudi Arabia’s Al Mouwasat Medical Services with $87.99 million and Qatar National Bank – Syria with $36.14 million were the 
other two new issues.

Globally, a succession of billion dollar plus Chinese IPOs helped drive the total value of the market to $37.8 billion: the highest amount since second quarter last year and an increase of 292 per cent on second quarter this year.

Globally, the largest IPO in the quarter (and the year so far) was China State Construction Engineering Corp, which listed in Shanghai in July 2009
 at $7.3 billion.

Nearly 63 per cent of the total global IPO value in Q3 was for the 62 Chinese companies, which listed in the period. US firms were second with total value of $3.2 billion or 8.4 per cent of global capital raised and four of the top 20 deals by size.

Globally, fourth quarter, Ernst & Young expects another strong quarter for the IPO market in Asia; the absence of a rapid rebound in Europe; and a cautious but substantive improvement in IPO sentiment in the US as risk appetite returns.
 — abdulbasit@khaleejtimes.com