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MENAFN - The Peninsula - 06/05/2012

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(MENAFN - The Peninsula) The Mena capital markets raised 82m in the first quarter of 2012.

This is a jump of 3.8 times as compared to the 21.7m raised in Q1 2011 but only 37 percent of the 226.1mn raised in the fourth quarter of last year. In total, four regional IPOs came to market in the first quarter this year, the same number as in Q4 of 2011, Ernst & Young's 2012 Q1 Mena IPO report has revealed.

Phil Gandier (pictured), MENA Head of Transaction Advisory Services, Ernst & Young, says: "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. The IPO markets have been very quiet since 2009 mainly due to lower than acceptable valuations than private and family businesses were willing to accept."

He added: "Even though the IPO numbers have remained more or less flat, we are seeing a growing interest from such businesses. The strategic rationale of institutionalizing these companies and protecting them from succession issues by embarking on the IPO journey is as relevant as ever. 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."

Two IPOs came to market in Saudi Arabia while one each was reported in Tunisia and Morocco respectively. The largest issuance was of Saudi Takween Advanced Industries which raised 62.38m, followed by Tokio Marine Saudi Arabia that raised 16m. The Moroccan and Tunisian IPOs were Afric Industries SA (3.11m) and Hexabyte (1.31m) respectively. "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.", added Phil.

Global IPO activity has fallen sharply in Q1 2012, according to Ernst & Young's Global IPO update. So far this quarter, a total of 157 deals has raised only 14.3bn, down by 69 percent by capital raised (46.6bn in 296 deals), compared to the same period last year. This is the lowest quarter on record since Q2 2009 when there were 82 IPOs worth 10.4bn.

Globally, this quarter was the first time when just one deal raised above 1bn since Q1 2009 when no IPOs exceeded 1b. Average deal size decreased to 91m compared to 157m in Q1 of 2011, a 42 percent drop.

 






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