Activity declines in the Middle East IPO market in Q3 of 2009: Ernst & Young

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The initial public offering (IPO) market in the Middle East has declined according to the figures in the Ernst & Young Middle East IPO Update for the third quarter (Q3) of 2009. A total of four companies listed in the Middle East in Q3 2009 raised US$871.79 million in Q3 2009 compared to five IPOs raising US$1.021 billion in the previous quarter and 14 IPOs raising US$3.74 billion during the Q3 ‘08. A total of US$1.97 billion has been raised in Middle East IPOs in the first three quarters of 2009 compared to US$12.44 billion in same period last year.

Three IPOs in Saudi Arabia and one in Syria raised a total of US$871.79 million in Q3 ’09. National Petrochemical Company of Saudi Arabia was the largest regional IPO in Q3 2009, raising US$640.85 million followed by the Saudi Steel Pipe Co. with US$106.81 million. Saudi Arabia’s Al Mouwasat Medical Services with US$87.99 million and Qatar National Bank – Syria with US$36.14 million were the other two new issues.

A shifting world order

Globally, a succession of billion dollar plus Chinese IPOs helped drive the total value of the market in Q3 2009 to US$37.8billion: the highest amount since Q2 2008 and an increase of 292% on Q2 2009. The number of IPOs (149) was the highest quarterly total this year but remains well below the trend in recent years.

Globally, the largest IPO in the quarter (and the year so far) was China State Construction Engineering Corp, which listed in Shanghai in July 2009 at US$7.3billion.

Nearly 63% of the total global IPO value in Q3 was for the 62 Chinese companies which listed in the period. US firms were second with total value of US$3.2billion or 8.4% of global capital raised and four of the top 20 deals by size. Indian firms were third with a total value of US$2.6billion or 7.2% of global capital raised, and three of the top 20 deals.

Whilst China and the rest of Asia boomed, Europe is still very much stuck in the doldrums. Total value across Europe was US$189.2million or 0.5% of the Q3 global figure.

Q4 IPO outlook

Globally, in Q4 ’09, Ernst & Young expects another strong quarter for the IPO market in Asia; the absence of a rapid rebound in Europe; and a cautious but substantive improvement in IPO sentiment in the US as risk appetite returns.