According to Ernst & Young’s MENA Q2 2012 IPO Update, regional companies raised a total of US$1.29 billion through five initial public offerings (IPOs) in the second quarter of 2012. This is almost three and a half times more than the USD374.77 million raised in the second quarter of 2011 and 15.46 times more than the USD 82.8 million raised in the first quarter of this year.
A total of USD 1.37 billion was raised in the IPO markets by regional companies in the first six months of this year as compared to USD 396.47 million in the first half of 2011- a growth of approximately 3.5 times.
Saudi Arabia’s Al Tayyar Travel Group led regional IPO deal sizes with its USD 364.65 million listing on the Tadawul, followed by Saudi Airlines Catering’s USD 354.09 million and the Kingdom’s Najran Cement Company’s USD 226.58 million IPO, also listed on the Tadawul. UAE based NMC Healthcare that listed on the London Stock Exchange in April, came in at fourth position with a USD 187 million IPO followed by Oman’s Bank Nizwa which raised USD 158.49 million and listed on the Muscat Stock Market.
Phil Gandier, MENA Head of Transaction Advisory Services, Ernst & Young says: “The sudden spike in IPO activity in the second quarter was an exceptional event within a consistently depressed MENA IPO market. There were only four IPOs in the second quarter whose ticket sizes made the difference while most country markets remain slow. The summer period is traditionally quiet so the third quarter will most probably bring these levels down again. Equally, the Bank Nizwa IPO was a result of the regulatory changes in Oman’s banking sector which has recently approved Islamic banking, while the NMC Healthcare listing did not raise funds in the region, but in London. We expect the Saudi market to continue listing a steady but modest flow of new companies during the remainder of 2012.”
Global IPO activity rises 141% in Q2
Global IPO activity saw an improvement in Q2 2012, according to Ernst & Young’s Global IPO update. So far this quarter, a total of 206 deals has raised USD 41.8b, an increase of 5% by deal numbers and 141% higher by capital raised compared to Q1 2012 (USD 17.4b via 196 deals). However, this quarter was 46% lower by number of deals and 36% lower by capital raised than in Q2 2011 (US$65.6b via 383 deals). The latter was, however, the highest second quarter since Q2 2007.
This quarter, the overall capital raised was boosted by Facebook’s US$16.0b IPO, which made up 38% of this quarter’s total. Even without this IPO, the overall global IPO activity in Q2 2012 (US$25.8b) was 49% higher by capital raised compared to Q1 2012. By funds raised, the top three exchanges in Q2 were NASDAQ, which accounted for 42% of global capital raised with 12 IPOs (US$17.5b), New York Stock Exchange (10.9%, USD 4.6b in 15 IPOs), and Bursa Malaysia (8%, USD 3.4b in 4 IPOs).
Maria Pinelli, Global Strategic Growth Markets Leader, Ernst & Young comments: “The second quarter results show relative optimism for capital-raising. However, this optimism is in certain markets and capital market activity continues to be hampered by lack of investor confidence and economic uncertainty. Balanced monetary policy in the developed and emerging economies will be important for investor and issuers’ confidence to return.”
IPO activity in Asian markets accounted for 35% of global IPO funds raised in Q2 2012 (or 56% of global funds raised when excluding the Facebook IPO), with 104 deals raising US$14.5b. This was an 87% increase compared to the previous quarter (USD 7.8b via 96 deals) but 47% decline compared to Q2 2011 (USD 27.7b via 165 deals). The largest Asian IPOs this quarter were the US$3.1b listing of Malaysia’s palm oil producer, Felda Global Ventures Holdings Bhd on Bursa Malaysia and China’s Haitong Securities Co Ltd (USD 1.8b) on Hong Kong Stock Exchange. Out of the top 20 global IPOs this quarter, eight were listed on Asian stock exchanges.