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Global Financial Crisis Slams Middle Eastern IPO Market
DUBAI - The global financial crisis has had a deep impact on the IPO market in the Middle East, with only $83.6 million raised during the first quarter of 2009 compared to $3.98 billion in 2008.
- PUBLISHED: Thu 23 Apr 2009, 11:09 PM UPDATED: Tue 17 Sept 2024, 2:45 PM
The capital raised through two IPOs during the quarter is just 2.1 per cent of the fund raised through 13 IPOs in the first quarter of 2008, according to Ernst & Young's first quarter Global IPO update 2009.
Data from Dealogic shows that globally, 37 IPOs have been postponed or withdrawn in Q1 2009, which follows from 85 in the previous quarter. The decline may be due to lower levels of filings in recent months. However, the 2009 IPO pipeline remains robust.
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Saudi Arabia's Etihad Atheeb Telecommunications Company, which raised $80 million and listed on the Riyadh Stock Exchange, was the largest IPO in the Middle East during this period. It was ranked third in terms of capital raised amongst a total of 50 IPOs worldwide, all of which raised just $1.4 billion.
A Syrian company, Al Adham Foreign Exchange Company, was the only other regional IPO in Q1 2009. It raised $3.62 million and listed on the Damascus Stock Exchange. A total of 50 IPOs worldwide raised $1.4 billion in Q1 2009, which was approximately half of the funds raised in Q4 2008.
Mead Johnson Nutrition, which raised $828 million on the New York Stock Exchange, the Chinese company Real Gold Mining Ltd, which raised $133.01 million on the Hong Kong Stock Exchange and Etihad Atheeb Telecommunications Company were the three largest IPOs globally and accounted for 75 per cent of the capital raised during this quarter.
Phil Gandier, Head of Transaction Advisory Services for Ernst & Young Middle East, added, “Of the 136 regional companies that have announced IPO plans, we do not expect more than a handful to list during the next quarter.
Gil Forer, Global Director of IPO initiatives at Ernst & Young, comments: “There are many quality companies from both developed and emerging markets, which have delayed or deferred their public listings. These companies continue to ready themselves to go public while waiting for market conditions to stabilise.”
However year on year trends show a marked deceleration in activity with total capital raised in the second quarter of 2008 down 59 per cent from $90.4 billion.
According to Azhar Zafar, Head of Mergers & Acquisitions, Ernst & Young Middle East, “The deal threshold required to make the top 20 global IPO list has fallen significantly over the past year - $6.84 million in Q1 2009 compared with $126.9 million in Q1 2008.
abdulbasit@khaleejtimes.com
