And there is no disputing the appetite. Like sharks at a whale carcass, investors across the GCC have been staging feeding frenzies whenever an IPO comes to market. The multiples of oversubscription on recent deals have exceeded the excesses of the dotcom boom of the late 1990s. Dubai's Amlak Finance offering was 33 times oversubscribed. Last month's IPO of Arabian Technical Construction Company (ATCC) went 64 times over. And in Saudi Arabia, the Sahara Petrochemical Company offering received bids totalling $10,000 million, some 125 times the volume of the shares offered.

The sharks will have to stay hungry. MEED estimates that the IPOs currently under preparation across the GCC are looking to raise about $9,000 million by the end of next year. Add to this a wave of capital increases from quoted entities - such as the $50 million offering from Arab Insurance Group (Arig) - or the sale of block stakes and the deal volume continues to rise.

'That there is massive liquidity in the Gulf looking for opportunities in equities has been clearly demonstrated,' says Walid Shihabi, head of research at Dubai-based Shuaa Capital. 'But this was not the case comparatively recently - the speed of the transformation is interesting.'

The billions of dollars aimed at IPOs this year compares sharply with the 2001 IPO of Dubai-based National General Insurance Company. The deal was the first in the UAE since the 1998 equities crash - and investors were tentative. The Emirates Bank Group subsidiary was only seeking to raise a mere $9 million, but still fell some way short.

Clearly a handful of key variables in the primary market equation have changed. First, strong oil revenues over the last three years have flowed rather than trickled into the domestic economies of the region and, in the prevailing low interest rate environment, money has been looking for investment opportunities. Second, since 11 September 2001, the politics of finance have been altered for a significant proportion of regional investors: the rate at which Gulf capital has flowed from the region has slowed and there has been - partly politically inspired - a greater interest in channelling funds into domestic economies. Third, the economics of investment have been screaming out for GCC investors to refocus their attention closer to home.

Booming markets

'The spectacular secondary market performances over the last few years have played a major role in stimulating primary market activity. There was a lag - as you would expect, it lasted about 18 months or so - between explosive secondary market appreciation and an open primary market, but it is now open,' says Shihabi. Investors seeing the possibility for healthy returns have been increasing regional allocations and the growing liquidity has been a magnet for potential IPOs. As figure 4 shows, regional stock markets have consistently been among the world's best performers. Profit growth across the region's corporates has, to a large extent, supported much of the spectacular price rises, and from a forward price-earnings perspective, the markets do not seem to be dangerously overvalued (see figure 2).

The fourth factor is less easy to measure, but arguably the most important. The theory of structural economic reform has been increasingly understood across the region and in recent years - supported by the oil revenue boom - been gradually turned into practical reform.

'Privati