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GCC markets to witness $10.5b worth of IPOs over three years

GCC stock markets are poised for a glut of over 80 initial public offerings (IPOs) which could be worth in excess of $10.5 billion over the next three years, according to a latest report.

  • Staff Report
  • Published: 00:47 March 3, 2008
  • Gulf News

Dubai: GCC stock markets are poised for a glut of over 80 initial public offerings (IPOs) which could be worth in excess of $10.5 billion over the next three years, according to a latest report.

"Significantly, IPOs measured in 2007, appreciated on average by 201 per cent, even with over-subscription per IPO falling to a more realistic 6.3 times," the report said.

Abu Dhabi-based Gulf Capital identified 83 maiden offers in the GCC, for which, managers have been assigned for 42 and another 41 have announced their intention to tap the equity market. The total number of IPOs in the GCC during the 2007-2010 period is expected to exceed 116, including 33 in 2007 and 83 offers in the coming years.

Morgan Stanley estimates a total of 110 IPOs in Saudi Arabia alone by the end of next year. The bank's Saudi unit has mandates to manage seven IPOs this year, including one by Saudi Basic Chemical Industries that may raise $80 million.

The National Bank of Abu Dhabi (NBAD) has already announced it expects to manage at least eight IPOs this year, with three aiming to raise at least $1 billion by the end of June. NBAD managed three IPOs last year and one so far this year.

Total

The total raised by IPOs increased by 40 per cent year-on-year to $10.5 billion during 2007 with the UAE witnessing $5.1 billion, followed by Saudi Arabia ($4.81 billion), Qatar ($389 million), Oman ($156 million) and Bahrain ($69 million).

"To realise an average return of 201 per cent despite regional market depreciation of nine per cent last year, is an extraordinary achievement. Investors, both regional and international will undoubtedly be drawn to the upcoming IPOs over the next three years," said Deep Marwaha, senior conference manager of the third Middle East IPO Summit, which takes place on March 16-19 in Abu Dhabi.

A reason for such a performance is widely put down to the pricing strategy of public offerings in the GCC. "Many IPOs last year were sold at a discount to book value and to earnings and appreciated quickly once on the market," said Marwaha.

Investors' have also been soothed by sound regional market fundamentals and high levels of liquidity, not to mention GDP growth and record budget surpluses. "GCC oil revenues are currently $ 1.2 billion per day," added Marwaha. The region's non-oil sectors are also making sizeable contributions to GDP growth.

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