Gulf-based companies announced plans for initial public offerings worth $14 billion (Dh51.5bn) in the first quarter of this year.
Booming liquidity and liberalisation of trade barriers are leading regional companies, both family and government owned, to increasingly turn to equity markets to fund their future expansion.
The diversity of companies going public is also improving, with the dominant sectors of financial services, energy and real estate joined by companies from construction, transport, telecoms, education and media.
These trends are underlined by data from Gulf Capital, which shows the number of IPOs due to be completed between 2008 and 2010 has jumped from 83 to 120 since the turn of the year, increasing the combined value of these floatations from $10bn to $24bn.
Of this 120, eight have been completed this year, while IPO managers have been appointed for a further 48. The remaining companies have simply announced their intention to float.
While many of these listings may not become reality, these figures nonetheless demonstrate the rising desire to float among Gulf businesses.
“These statistics underline an accelerated growth in the value and volume of IPOs during the first quarter of 2008, which suggests that by the end of the current year the value of initial public offerings will exceed that of the IPOs made in 2007, which stood at $12bn,” a Gulf Capital report states.
The IPOs completed so far this year were worth $4bn, which is 351 per cent higher than the 2007 first-quarter total of $900 million.
“According to available information as at the end of the first quarter of 2008, the value of initial public offerings is forecast to surge by 101 per cent in the current year, compared to 2007,” the report claims.
Saudi Arabia was home to five of the Gulf’s eight initial public offerings this year, with this quintet worth a combined $3.3bn, while the UAE’s two flotation’s raised $176m and Qatar’s sole offering netted $511m.
“Gulf financial markets witnessed a noticeable slowdown during the first quarter of 2008, registering on average a marginal growth of only 0.8 per cent,” Gulf Capital says.
“Nevertheless, the IPOs launched in the past two years appreciated by an average of 159 per cent compared to the issuance value.”
GCC sees IPOs worth $14bn announced in Q1