E&Y: Regional IPO deal values in 2009 are one-sixth of 2008's 

(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.

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.

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.

Samar Obaid, Partner at Ernst & Young Jordan, said: This decline reflects investor sentiment in the region and the impact the global economic downturn has had on the world at large and the region in particular. However, I believe that the market is already showing much potential for next year with financial certainty around the world increasing in many companies and across many economies. Some companies have chosen to delay potential and planned IPOs in the pipeline for this year which again translates into a better outlook for the IPO Market in the Middle East next year.

She added: Here in Jordan we witnessed no IPO activity this year, as many companies chose to raise capital from private equity or strategic partners. As confidence in the market increases, it is likely that there will also be an increase of fund-raising on the Amman Stock Exchange.

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).

IPO activity in North America also 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.

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).