(MENAFN Press) Reflecting the general state of the regional IPO market, the year-end IPO update by Ernst & Young states that total regional IPO deal values in all of 2009 came in at approximately one-sixth the value of all IPOs in 2008. Middle Eastern markets raised US2.06 billion from 15 IPOs until 25th November this year as compared to US12.46 billion in all of 2008.
Q4 in the region dominated by the insurance sector
Of the four regional IPOs between October and November of 2009, three were Saudi Arabian insurance companies and one bank in Syria. Syrias Albaraka Bank was the biggest IPO raising US37.23 million followed by Saudi Arabias Gulf General Cooperative Insurance Company (Al Khaleej Insurance) at US21.3 million. Al Alamiya Cooperative Insurance Company and Buruj Cooperative Insurance Company, both from Saudi Arabia, raised US16 million and US13.87 million, respectively.
According to Phil Gandier, Managing Partner, Transaction Advisory Services, Ernst & Young Middle East, In 2009 IPO activity was concentrated in three countries; Qatar raised US952.03 million, Saudi Arabia raised US1.03 billion and Syria raised US76.99 million in 2009. There has been no IPO activity in any other country in the Middle East in 2009. It is difficult to foresee with any certainty when the IPO activity will pick up even though as many as 114 IPOs have been announced.
Asia and South America drives growth
Globally, after stagnant markets in the first two quarters, IPO activity started to pick-up in the second half of 2009, principally driven by deals from Asia and South America. These two regions have raised US68.6 billion in listings so far in 2009 accounting for 72% of the total IPO value, according to the update.
The number of deals for the 11 months is dramatically down in 2009, with only 459 IPOs listing so far in 2009 (compared to 740 deals for the same time period in 2008). However, from 1 January to 30 November 2009, the capital raised globally was US94.9 billion, which is at parity with the amount raised in the 11 months of 2008 (US94.6 billion).
Gregory K. Ericksen, Global Vice Chair Strategic Growth Markets for Ernst & Young says: Emerging market activity has dominated IPO markets this year with Chinese companies the largest source of total funds raised globally. Brazils stock market has seen a flurry of activity, notably in financial services. China and Brazil are clearly playing an integral role in leading the global economic recovery.
Capital shifts accentuated by the recession
IPO activity in North America declined in value by nearly 38%, from US26.6 billion in the 11 months in 2008 to US16.6 billion with 66 IPO listed so far this year. European IPOs only accounted for 10% of total IPO deals and a modest US 5.0 billion in value. This compares with 22% of total value of IPO deals last year, with 160 IPOs raising US13.6 billion. However, we did see some significant activity in the US in the second half of 2009 and finally in Europe in Q4 with some high profile listings received well by the market.
IPOs by sectors and stock exchanges
The leading sectors by number of deals were industrials (77 IPOs); materials (68); and high technology (55). The following three sectors (out of 12) accounted for 50% of total capital raised: financials (US21.7 billion), industrials (US16.1 billion) and real estate (US9.5 billion).
The top three IPOs by capital raised were Banco Santander Brazil SA, the largest IPO this year and the largest in Brazilian history, which raised US7.5 billion, China State Construction Engineering Corp, which listed in Shanghai in July at US7.3billion, Metallurgical Corp of China Ltd (US5.2 billion on the Shanghai and Hong Kong stock exchanges). Of the top 10 IPOs, six are from emerging markets.
By funds raised, the top three exchanges for the year to date are the Hong Kong Stock Exchange, which accounted for 18.7% of capital raised (US17.7 billion); New York Stock Exchange 17.9% (US16.9 billion) and Shanghai Stock exchange for 17.0% (US16.1 billion). The top three exchanges by deal activity are the Shenzhen stock exchange (73 IPOs); Hong Kong Stock Exchange (47) and KOSDAQ stock exchange (46).
Ericksen concludes, Dynamic companies from emerging markets continue to list on their local stock exchanges. The principal exchanges in China, India, Brazil and other emerging markets are now mature enough to source funding for the very largest companies seeking listings.