x Abu Dhabi, UAEFriday 21 July 2017

Few Mena IPOs this year but greater amounts raised

The initial sale of stock in companies from the region rose in the first quarter, bucking the global trend.

Money raised by the initial sale of stock in the region was almost four times higher in the first quarter than in the same period last year.

The rise helped the Middle East and North Africa (Mena) buck the global trend, in which capital raised via initial public offerings was the lowest on record since the second quarter of 2009.

In total, four IPOs came to market in Mena in the first quarter of this year, raising US$82.8 million (Dh304.1m) - the same number of IPOs as in the previous quarter but only 37 per cent of the value.

"Even though we have seen an improvement in the performance of regional bourses, this has not yet translated into a consistent increase in regional IPO activity," said Phil Gandier, the Mena head of transaction advisory services at Ernst & Young.

IPO markets have been quiet since 2009, mainly because of valuations that were lower than private and family businesses were prepared to accept, Mr Gandier said.

But there is a growing interest in IPOs among such businesses.

"Improvements in the secondary markets have increased the prospects of better pricing for IPOs. This translates to a subsequent increase in the readiness to go public," he said.

Two IPOs came to the market in Saudi Arabia, while one each was reported in Tunisia and Morocco.

The largest were from Saudi Arabia: Takween Advanced Industries raised $62.38m, while Tokio Marine Saudi Arabia raised $16m.

Afric Industriesfrom Morocco raised $3.11m, while Hexabyte of Tunisia raised $1.31m.

"Although the funds raised in the current quarter were still low by historical standards, provided we don't see any major regional unrest, I think we are going to see an increase in funds raised in specific markets over the remainder of 2012," said Mr Gandier.

Globally, 157 deals raised $14.3bn in the first quarter, a 69 per cent fall from the same period last year.

The figure is the lowest on record since the second quarter of 2009, when 82 IPOs were issued worth $10.4bn.

The average deal size decreased to $91m, compared with $157m in the first quarter of last year, representing a 42 per cent drop.

More than one in five IPOs were in the technology sector, raising $2.1bn from 35 deals.

"Technology IPOs remain very attractive to investors," says Maria Pinelli,the global strategic growth markets leader at Ernst & Young.

gduncan@thenational.ae

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