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IPO activity rockets 344%

Initial public offering, or IPO, activities in the Middle East and North Africaregion witnessed a record 344 per cent jump in terms of money raised in the second quarter of the year compared to same quarter last year.

Firms in the region raised a total of $1.29 billion through five IPOs in the June quarter of 2012, almost three-and-a-half times more than the $374.77 million raised in the second quarter of 2011 and 15.46 times more than the $82.8 million raised in the first quarter of this year, according to Ernst & Young’s Mena region report released on Tuesday. A total of $1.37 billion was raised in the IPO markets by regional companies in the first six months of this year as compared to $396.47 million in the first half of 2011, a growth of approximately 3.5 times.

Saudi Arabia’s Al Tayyar Travel Group led regional IPO deal sizes with its $364.65 million listing on the Tadawul, followed by Saudi Airlines Catering’s $354.09 million and the Kingdom’s Najran Cement Company’s $226.58 million IPO, also listed on the Saudi stock exchange.

UAE-based NMC Healthcare, which listed on the London Stock Exchange in April, came in at fourth with a $187 million IPO, followed by Oman’s Bank Nizwa that raised $158.49 million and is listed on the Muscat Stock Market. “The sudden spike in IPO activity in the second quarter was an exceptional event within a consistently depressed Mena IPO market. There were only four IPOs in the second quarter whose ticket sizes made the difference while most country markets remain slow,” Phil Gandier, Mena head of Ernst & Young’s Transaction Advisory Services, said in a statement.

The summer period is traditionally quiet so the third quarter will most probably bring these levels down again, Gandier said, adding that equally, the Bank Nizwa IPO was a result of the regulatory changes in Oman’s banking sector which has recently approved Islamic banking, while the NMC Healthcare listing did not raise funds in the region, but in London.

“We expect the Saudi market to continue listing a steady but modest flow of new companies during the remainder of 2012,” he added.

Global IPO activity also saw an improvement in the second quarter of 2012, according to Ernst & Young’s global IPO update. So far this quarter, a total of 206 deals has raised $41.8 billion, an increase of five per cent by deal numbers and 141 per cent higher by capital raised compared to the first quarter of 2012 ($17.4 billion via 196 deals). However, this quarter was 46 per cent lower by number of deals and 36 per cent lower by capital raised than in the second quarter last year ($65.6 billion via 383 deals). The latter was, however, the highest second quarter since second quarter of 2007.

This quarter, the overall capital raised was boosted by Facebook’s $16 billion IPO, which made up 38 per cent of this quarter’s total.

Maria Pinelli, global strategic growth markets leader at Ernst & Young, said: “The second quarter results show relative optimism for capital-raising. However, this optimism is in certain markets and capital market activity continues to be hampered by lack of investor confidence and economic uncertainty. Balanced monetary policy in the developed and emerging economies will be important for investor and issuers’ confidence to return.”

— abdulbasit@khaleejtimes.com