The Middle East's total IPO (initial public offering) deal values in all of 2009 came in at approximately one-sixth the value of all IPOs in 2008, with the regional markets raised $2.06 billion from 15 IPOs until Nov. 25 this year as compared to $12.46 billion in all of 2008, Ernst & Young said. In its latest yearend IPO update sent to the Saudi Gazette, Ernst & Young said of the four regional IPOs in October and November of 2009, three were Saudi Arabian insurance companies and one bank in Syria. Syria's Albaraka Bank was the biggest IPO raising $37.23 million followed by Saudi Arabia's Gulf General Cooperative Insurance Company (Al Khaleej Insurance) at $21.3 million. Al Alamiya Cooperative Insurance Company and Buruj Cooperative Insurance Company, both from Saudi Arabia, raised $16 million and $13.87 million, respectively. Phil Gandier, managing partner, Transaction Advisory Services, Ernst & Young Middle East, said “in 2009, IPO activity was concentrated in three countries: Qatar raised $952.03 million, Saudi Arabia raised $1.03 billion and Syria raised $76.99 million in 2009. There has been no IPO activity in any other country in the Middle East in 2009. It is difficult to foresee with any certainty when the IPO activity will pick up even though as many as 114 IPOs have been announced.” Ernst & Young further said globally, after stagnant markets in the first two quarters, IPO activity started to pick-up in the second half of 2009, principally driven by deals from Asia and South America. These two regions have raised $68.6 billion in listings so far in 2009 accounting for 72 percent of the total IPO value, according to the update. The number of deals for the 11 months is dramatically down in 2009, with only 459 IPOs listing so far in 2009 (compared to 740 deals for the same time period in 2008). However, from Jan.1 to Nov.30, 2009, the capital raised globally was $94.9 billion, which is at parity with the amount raised in the 11 months of 2008 ($94.6 billion). Gregory K. Ericksen, global vice chair, Strategic Growth Markets for Ernst & Young, said: “Emerging market activity has dominated IPO markets this year with Chinese companies the largest source of total funds raised globally. Brazil's stock market has seen a flurry of activity, notably in financial services. China and Brazil are clearly playing an integral role in leading the global economic recovery.” Meanwhile, IPO activity in North America declined in value by nearly 38 percent, from $26.6 billion in the 11 months in 2008 to $16.6 billion with 66 IPO listed so far this year, the report said. European IPOs only accounted for 10 percent of total IPO deals and a modest $5.0 billion in value. This compares with 22 percent of total value of IPO deals last year, with 160 IPOs raising $13.6 billion. “However, we did see some significant activity in the US in the second half of 2009 and finally in Europe in Q4 with some high profile listings received well by the market.” The leading sectors by number of deals were industrials (77 IPOs); materials (68); and high technology (55). The following three sectors (out of 12) accounted for 50 percent of total capital raised: financials ($21.7 billion), industrials ($16.1 billion) and real estate ($9.5 billion). The top three IPOs by capital raised were Banco Santander Brazil SA, the largest IPO this year and the largest in Brazilian history, which raised $7.5 billion, China State Construction Engineering Corp, which listed in Shanghai in July at $7.3billion, Metallurgical Corp of China Ltd ($5.2 billion on the Shanghai and Hong Kong stock exchanges). Of the top 10 IPOs, six are from emerging markets. By funds raised, the top three exchanges for the year to date are the Hong Kong Stock Exchange, which accounted for 18.7 percent of capital raised ($17.7 billion); New York Stock Exchange 17.9 percent ($16.9 billion) and Shanghai Stock exchange for 17.0 percent ($16.1 billion). The top three exchanges by deal activity are the Shenzhen stock exchange (73 IPOs); Hong Kong Stock Exchange (47) and KOSDAQ stock exchange (46). “Dynamic companies from emerging markets continue to list on their local stock exchanges. The principal exchanges in China, India, Brazil and other emerging markets are now mature enough to source funding for the very largest companies seeking listings,” he noted.
