The region’s initial public offering (IPO) market declined 69.3 per cent raising just $843.9m in total in 2011 when compared with $2.8bn in 2010, according to consultancy firm Ernst & Young’s Mena IPO update.
“Companies chose other fundraising routes over IPOs in 2011, which was another year of low capital market activity. Low investor interest continued in the MENA region as companies chose Islamic funding such as Sukuk, which saw a record year, as the preferred route for fundraising,” says Phil Gandier, Mena head of transaction advisory services at Ernst & Young.
The largest IPO in 2011 was the UAE’s Eshraq Properties Company, which raised $229.1m, followed by Saudi Arabia’s Hail Cement Company, which raised $130.5m.
Saudi Arabia led the market with four IPOs, which raised $460.5m in total.
Investors and issuers in the region are still concerned over the volatility of the capital markets, which is likely to continue in the first quarter of 2012, according to Gandier.
“However, the number of announced IPOs continues to grow across the region. The moment economic conditions and investor sentiment improves, we could see a flood of IPOs in the regional bourses,” he says.