Saudi Arabia could see about 110 IPOs

Dubai: Morgan Stanley expects about 110 initial public offerings (IPOs) in Saudi Arabia by the end of next year as companies seek funds to expand and benefit from surging economic growth in the world's biggest oil producer.

"There is enormous pent-up demand to sell shares,'' Fahad A. Al Mubarak, chairman, Morgan Stanley Saudi Arabia said in Dubai on Thursday. "Companies are maturing, there has been a change in generation in some cases, and there is economic growth.''

Morgan Stanley entered Saudi Arabia with local partner The Capital Group in January 2007 and managed eight of the 26 Saudi IPOs last year, including the kingdom's first so-called book- built issue, by Saudi Vitrified Clay Pipe in May.

Investment banks, including Merrill Lynch, Deutsche Bank, Bear Stearns and Calyon opened offices in Saudi Arabia in the past two years as demand for their services increases.

The country is spending billions of dollars on infrastructure and industrial projects, spurring demand for financial advice.

Morgan Stanley Saudi Arabia has mandates to manage seven IPOs this year, including an offering by Saudi Basic Chemical Industries (Sabic) that may raise 300 million riyals ($80 million), Al Mubarak said. Two share sales slated in the first half of the year are by financial service companies.

"Investing in IPOs is very attractive in Saudi Arabia and most shares have doubled after listing,'' Al Mubarak said.

In January, shares of Rabigh Refining and Petrochemicals Co., the industrial complex being built by national oil producer Saudi Aramco, more than doubled in debut trading after an IPO that raised $1.2 billion.

Companies in six Arab countries raised $12.8 billion last year in 52 share sales.