IPO activity in the Middle East escalated to new heights in 2005, with $6 billion being raised by investors, a staggering 100 per cent increase over the previous year.
The booming IPO market was well supported by an improvement in corporate governance and disclosure practices for companies already listed on the GCC bourses.
Omar M. El-Quqa, Executive Vice President, Global Investment House, who is a
keynote speaker at the IPO Summit commented, “The establishment of independent regulatory authorities in various countries was an important step
towards improving corporate governance and transparency across the region”.
“The formation of the Securities and Commodities Authority in the UAE, the Capital Market Authority in Saudi Arabia which was established in 2003 and the Capital Market Authority in Oman formed in 1998, have certainly under-pinned GCC investor confidence”, he added.
IPO activity is also supported to a great extent by the improvement in liquidity in the stock markets where market capitalisation, which was around US$120bn in 2000, has catapulted to breach the US$1 trillion mark in 2005, a growth of over 800% within a period of just five years.
Another significant development is the emergence of corporations, borne out of the traditional family businesses, where disclosure practices have improved steadily and many have started reporting quarterly financial results. Although there is adequate scope for improving the reporting standards of companies throughout the region, investor confidence is still robust.
UAE companies were the regional leaders in 2005 raising nearly $1.9 billion in 2005, closely followed by Saudi Arabian companies raising approximately $1.7 billion.
Gareth Parry, Project Director, IPO stated, “The spurt in IPOs in 2005 was no doubt fuelled in part by the stock price performance for both IPOs and newly listed companies. The average percentage increase for the 41 new companies listed last year, reached an incredible 159%, and supports the optimism prevalent with GCC investors”.
The 1st Middle East IPO Summit 2006 is being organised by the Institute for International Research (IIR) and will be held at the iconic Al Murooj Rotana Hotel in the heart of Dubai’s burgeoning financial centre, on 25-28 February 2006.
