Multi billion dollar Saudi IPOs outperform region

Saudi Arabia looks set to continue to outperform the rest of the Middle East in stock market flotations, in spite of a general downturn in the Arabian Gulf, according to analysts.

All aspects of the most active initial public offering (IPO) market and largest economy in the Middle East - Saudi Arabia - come under the spotlight at the 2nd Saudi IPO Summit that takes place from 10-14 November 2007 at the Four Seasons Hotel, Riyadh, with the patronage of HRH Prince Salman Ibn Abdul Aziz Al Saud, Governor of Riyadh.

On average, newly listed Saudi shares have appreciated fivefold after listing. Saudi companies have also raised the most in the region this year. The decline in investor demand has mainly been confined to Qatar, Kuwait and Bahrain

The number and size of IPOs in Saudi Arabia is expected to outperform the rest of the Middle East as the kingdom displays the continuing maturity of its capital markets. In the first half of this year, the Middle East clocked up 20 IPOs. Eleven were in Saudi Arabia.

"Saudi Arabia's economic performance is robust and sound," said Deep Marwaha, senior conference manager for IIR Middle East, organiser of the Saudi IPO Summit.

"Strong oil revenues and high liquidity have ensured strong GDP growth and general sentiment, although lower than previous years, is returning. Saudi Arabia's appetite continues to be healthy with several large and small IPOs in the pipeline."

Two of the three largest offerings in the second quarter of this year were Saudi Kyan Petrochemical Company's offering of US$1.8 billion and Saudi Arabia's Jabal Omar Development Company offer of US$537 million.

The Saudi Arabian IPO market is expected to continue to grow in the next few years as Saudi Arabia's financial sector makes progress in liberalisation, regulation and standards. However, more needs to done to attract GCC institutional investment, according to Brad Bourland, chief economist, Jadwa Investment Bank, and one of the Summit participants.

He said the institutional investor base was still developing. "There are institutional investors and family conglomerates that never sell anything," Bourland added. "The natural evolution will see the institutional investor base grow, with more mutual funds."

The 2nd Saudi IPO Summit features an impressive line-up of industry experts as speakers including investors, regulators and executives of recently successfully floated companies. Debate and discussion will centre on the regulatory and industry standards, factors affecting valuation and timing, cross-listing investment strategies and macro-economic factors. The summit will also address the fundamental issues surrounding IPOs, such as reasons for launching, the comprehensive step-by-step process, essential management restructuring, conversion for family businesses and the exit strategy.

Case studies will include the IPO of Saudi Kayan Petrochemical Company, and Dr Abdulrahman Al Zamil, Chairman of the Zamil Group, will give a post-IPO view on the impact for a family owned business.

There will also be a post-Summit Islamic Debt Capital Markets' Boot Camp on Sukuk securitisation as an alternative to raising finance through conventional debt instruments and public offerings.

The 2nd Saudi IPO Summit has received solid industry support with Samba as headline sponsor. Principal sponsor is NCB Capital, primary sponsor is Al Bilad Bank, lead sponsor is Calyon. Supporting partner is Jadwa Investment. Gold sponsor is NAEEM Investment Company; silver sponsors are the Saudi Investment Bank, Swicorp, Oracle, TNI and TradeNet.