Four Insights into the Middle East IPO Market

The second quarter of 2011 was a tough one for the Middle East/North Africa region. While the IPO market improved quarter over quarter, it was still down relative to Q2 2010, according to date from Ernst & Young.

According to Phil Gandier, head of transaction advisory services for the Middle East/North Africa at Ernst & Young, ‘The lack of any trend in the regional IPO market is underlined by the lack of confidence to list in these conditions.’ He adds, ‘Fluctuation in funds raised every quarter is only a function of the strength and stability of the listed companies. It’s likely that the next quarter may also see firms listing in the low single digits.’

Here’s what you need to know about the Q2 2011 Middle East/North Africa IPO market:

1. Capital raised: IPOs brought $374.77 mn in fresh capital to countries listing in the region, a decline of 50 per cent from Q2 2010. In the first quarter, however, only $24.14 mn was raised in IPOs in the region.

2. Brutal first half of 2011: in total, IPOs brought in $398.91 mn in capital, compared to $1.2 bn in the first half of 2010 – for a decline of 66.84 per cent year over year.

3. Lots of delays: 225 companies have put off their IPOs over the past three years. Gandier explains, ‘These companies would proceed with listing as the market sentiment improves and fund raising via the capital markets picks up’. So, there does appear to be some pent-up demand.

4. The rest of the world: while conditions were tough in the Middle East and North Africa, the rest of the world had a strong second quarter. Global IPO fundraising surged 38 per cent relative to the same period in 2010. 378 IPOs around the world brought in $64.6 bn in capital.

Source: Arabian Business