Regional IPOs appreciate by 201%

Significantly, IPOs measured in 2007, appreciated on average by 201%, even with over-subscription per IPO falling to a more realistic 6.3 times, according to industry reports.

"To realise an average return of 201% despite regional market depreciation of 9% last year, is an extraordinary achievement. Investors, both regional and international will undoubtedly be drawn to the upcoming IPOs over the next three years," commented Deep Marwaha, Senior Conference Manager of the 3rd Middle East IPO Summit.

Abu Dhabi-based Gulf Capital identified 83 maiden offers in the GCC, for which, managers have been assigned for 42 and another 41 have announced their intention to tap the equity market. The total number of IPOs in the GCC during the 2007-2010 period is expected to exceed 116, including 33 in 2007 and 83 offers in the coming years.

Morgan Stanley estimates a total of 110 IPOs in Saudi Arabia alone by the end of next year. The bank's Saudi unit has mandates to manage seven IPOs this year, including one by Saudi Basic Chemical Industries that may raise $80m.

In the UAE, the National Bank of Abu Dhabi (NBAD) has already announced it expects to manage at least eight IPOs this year, with three aiming to raise at least $1bn by the end of June. NBAD managed three IPOs last year and one so far this year.

The total raised by IPOs increased by 40% year-on-year to $10.5bn during 2007 with the UAE witnessing $5.1bn, followed by Saudi Arabia ($4.81bn), Qatar ($389m), Oman ($156m) and Bahrain ($69m).

One reason for such a market-bucking performance is widely put down to the pricing strategy of public offerings in the GCC. "Many IPOs last year were sold at a discount to book value and to earnings and appreciated quickly once on the market," said Marwaha.

Investors' nerves have also been soothed by the sound regional market fundamentals and high levels of liquidity, not to mention GDP growth and record budget surpluses. "The GCC oil revenues are currently $1.2bn per day. With tensions over Iran and political posturing by Venezuela, any notion of softening prices were dispelled recently when oil prices shot back up towards $100 per barrel," added Marwaha.

In addition the region's non-oil sectors are now beginning to make sizeable contributions towards GDP growth. "Most GCC governments have outlined more than $1 trillion in capital expenditure for oil and non-oil sectors in the next five-to-six years, which will have a multiplier effect for the private sector which will require more funds to be raised in the stock markets," noted Marwaha.

Middle East's IPO Summit which takes place on 16-19 March at the Abu Dhabi InterContinental Hotel, will host investment experts, regulators and market leaders who will examine regulatory issues as well as new products and issues impacting the investment environment and includes a Middle East Investment Day with an Executive Masterclass by contrarian investment guru, Hong Kong based Dr Marc Faber.

The Middle East IPO Summit Chairman is Mamdoh Al Rouhani, Managing Director of MS&L, Saudi Arabia. "With large IPOs in the pipeline across many Middle Eastern markets, the need for professionals to share information and network with each other is more important than ever," he said.

Among the market movers and shakers taking part in the Summit will be speakers from the Global Investment House, Deutsche Bank, Ithmar Capital, Abraaj Capital, Algebra Capital, AB Capital, The National Investor, NBK Capital, Jeffries, KPMG, Emirates Financial Services, Rasmala Investments, Calyon, UBS, Alpen Capital, Samba Financial Group and Bank of New York Mellon.