Saudi leading 2010 GCC IPO activity

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PricewaterhouseCoopers (PwC), a leading international professional services organisation, has found initial public offering (IPO) activity in the Kingdom of Saudi Arabia (KSA) still to be leading the regional IPO activity in the first half of 2010 with seven of the eight taking place in KSA. The number of IPOs was up slightly on the seven in the first half of 2009 however the total amount raised at the end of June 2010 was USD830 million, 31.4% lower than the USD1,209 million raised during the same period in 2009.

The largest IPO in 2010, as of 30 June, was for Knowledge Economic City Company in KSA which raised USD272million, the equivalent of 32.7% of the total capital raised in the GCC. The major factor behind the fall in value in 2010 compared to 2009 is due to the large Vodafone Qatar IPO which raised USD952million in the first quarter of 2009.

“We’re optimistic that we will see a pickup in activity in the GCC towards the end of 2010 and into 2011 and that we will see a return of IPOs to the regional markets,” commented Steve Drake, Head of Middle East Capital Markets Group, PricewaterhouseCoopers. “We are seeing a significant increase in activity behind the scenes and a number of companies are gearing up for IPO this year.

“There has been a step change in sentiment and with a pent up demand for capital, companies are preparing to come to the market. As it takes between six and nine months to prepare for IPO, we’re likely to see more companies list by the end of the year or early 2011.”

The only non-Saudi IPO of 2010 was in Qatar, for the Mazaya Qatar Real Estate Development Company, which raised USD144 million in Q1. However, Europe and China are still raising more capital than the GCC equity markets.

In Europe, the stock exchanges, led by London, saw IPO activity rise for the fifth quarter in a row during the April to June period, amid signs of a modest recovery in investor interest in primary listings. There were 168 IPOs on European exchanges in the first half of 2010 with an offering value of €13,730 million (approximately USD17 billion).

The total value of European IPOs in the first half still lagged the highly successful Greater China markets which saw 207 IPOs with an offering value of €28,327million (approximately USD35 billion). The US markets in turn were weaker than Europe in both number and value of IPOs; USD9,150 million was raised through 66 IPOs in the first half of 2010.