Capital raised in Middle East IPOs remain resilient to global economic uncertainty for now

Saudi Arabia's Al Inma Bank was the largest IPO in the Middle East in the second quarter of 2008 raising $2.8bn which amounted to 60% of the total funds raised. Saudi Arabia's Rabigh Refining and Petrochemical Company and Mobile Telecommunications Company Saudi Arabia combined accounted for 75% of the capital raised in the first quarter of 2008.

Other large IPOs in the region included Mohammad Al Mojil Group with $559.94m. The UAE's DEPA United Group raised $432.3m and was followed by two Egyptian companies - Palm Hills Developments with $348.22m and Maridive and Oil Services with $272.93m.

According to Azhar Zafar, Head of Mergers & Acquisitions, Ernst & Young Middle East:

'There were 52 IPOs during 2007 and in the first half of 2008 there have been 26. The total capital raised in the first half of 2008 amounted to $8.69bn compared to $4.83bn from 33 IPOs during the same period last year. The trend in the market is fewer but larger IPOs. IPOs continue to be oversubscribed in most instances, which reflects the continued appetite for IPOs in the market, for now.'

Phil Gandier, Head of Transaction Advisory Services for Ernst & Young Middle East, added, 'Although the drop in number and amount of capital raised in IPOs has been more severe in mature global markets, the region has shown some resilience as a result of liquidity created on the back of continuously increasing oil prices. My expectations for the rest of the year remain optimistic due to the large number of announced and to-be-announced IPOs. Companies that have either withdrawn or postponed their IPOs would revisit going public once they realize that market conditions in the Middle East region are less fraught with the uncertainty that is persisting in other regions.'

Globally, the size of IPOs taken for two quarters on aggregate was roughly half as much as the 2007 while more IPOs have been postponed or withdrawn in the first six months of 2008 (177) than in all of 2007 (169). In the second quarter of 2008, a total of 258 IPOs worldwide raised $37.4bn in capital. This compares with 247 IPOs worth $41.2bn in the previous quarter. However, compared with the same quarter in 2007, total capital raised fell by 59% (from $90.4bn to $37.4bn) and the number of deals more than halved (from 567 to 258). The BRIC states (Brazil, India, China and Russia) accounted for 76 deals worth $11.8bn in the second quarter.

Emerging markets continued to drive activity in the second quarter with China leading the way in both value ($6.2bn) and volume (56 IPOs). Seven of the top 10 and 15 of the top 20 IPOs by capital raised were from emerging markets.

Four countries accounted for half of the capital raised globally: China ($6.2bn); Brazil ($4.6bn); United States ($4.3bn); and Saudi Arabia ($3.4bn). The most active countries in terms of number of deals were China (56); Poland (21); and Australia, South Korea and India (17).