The initial public offering (IPO) market that has been drying up since 2007 is likely to make a comeback by the last quarter of the current year or latest by the first quarter of 2010, according to Nasdaq Dubai CEO.
Jeff Singer said though the exchange allowed the companies to make public offer and listing in dirham about a year ago, it has so far met with poor response.
"We want companies to use this opportunity and come forward to do dirham-denominated IPOs and we would encourage companies to do so as this will help the market to recover," he told Emirates Business.
Singer, who noted that the major markets in the region have witnessed a contraction of about 70 per cent in their volume trading during 2008 and another seven per cent during the first quarter compared with the corresponding period last year, said the IPO market is unlikely to recover before the last quarter of the current year.
"I believe we will start seeing public offerings from the last quarter of the current year or the first quarter of next year. It is a wait-and-see period that we are passing through now," he added.
While the region had 63 IPOs in 2007 raising $14.3 billion (Dh52.4bn) from the market, the year 2008 had to be content with 39 issues that collected $12.5bn.
Coming to the current year, the region has so far seen only 11 listings out of which, five have come from the Syrian stock market.
"Moreover, half the money collected through IPOs in 2009 has come from the Drake and Skull International IPO, which hit the market last year and got listed this year after nine months since the issue came to the market," said Singer.
However, Nasdaq Dubai chief hopes that there is a pipeline of IPO waiting to hit the market from the Saudi market and these are primarily from insurance companies. Another factor that needs a mention is that while the average size of IPO in 2007 was $227 million, the size grew by about 50 per cent in 2008 to $320m.
However, the average size dropped considerably in the current year.
Nasdaq Dubai, the then DIFX, announced plans in August last year to allow companies to list their shares in dirham and increase trading time with a view to boosting liquidity by making the trading attractive to regional investors.
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