Mena IPOs up 344% to $1.29bn in Q2 2012

Companies in the Middle East and North Africa (Mena) raised a total of $1.29 billion through five initial public offerings (IPOs) in the second quarter of 2012, according to Ernst & Young’s MENA Q2 2012 IPO Update.

This is almost three and a half times more than the $374.77 million raised in the second quarter of 2011 and 15.46 times more than the $82.8 million raised in the first quarter of this year.

A total of $1.37 billion was raised in the IPO markets by regional companies in the first six months of this year as compared to $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 $364.65 million listing on the Tadawul, followed by Saudi Airlines Catering’s $354.09 million and the Kingdom’s Najran Cement Company’s $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 $187 million IPO followed by Oman’s Bank Nizwa which raised $158.49 million and listed on the Muscat Stock Market.

Phil Gandier, Mena Head of Transaction Advisory Services, Ernst & Youn, said: “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

Global IPO activity saw an improvement in Q2 2012, according to Ernst & Young. So far this quarter, a total of 206 deals has raised $41.8 billion, an increase of 5 per cent by deal numbers and 141 per cent higher by capital raised compared to Q1 2012 ($17.4 billion via 196 deals). However, this quarter was 46 per cent lower by number of deals and 36 per cent lower by capital raised than in Q2 2011 ($65.6 billion 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 $16.0b IPO, which made up 38 per cent of this quarter’s total. Even without this IPO, the overall global IPO activity in Q2 2012 ($25.8 billion) was 49 per cent higher by capital raised compared to Q1 2012.

By funds raised, the top three exchanges in Q2 were Nasdaq, which accounted for 42 per cent of global capital raised with 12 IPOs ($17.5 billion), New York Stock Exchange (10.9 per cent, $4.6 billion in 15 IPOs), and Bursa Malaysia (8 per cent, $3.4 billion 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.”

Asia IPOs

IPO activity in Asian markets accounted for 35 per cent of global IPO funds raised in Q2 2012 (or 56 per cent of global funds raised when excluding the Facebook IPO), with 104 deals raising $14.5b. This was an 87 per cent increase compared to the previous quarter ($7.8b via 96 deals) but 47 per cent decline compared to Q2 2011 ($27.7b via 165 deals).

The largest Asian IPOs this quarter were the $3.1b listing of Malaysia’s palm oil producer, Felda Global Ventures Holdings Bhd on Bursa Malaysia and China’s Haitong Securities ($1.8b) on Hong Kong Stock Exchange. Out of the top 20 global IPOs this quarter, eight were listed on Asian stock exchanges.

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