Mena IPOs down 87% in first half of 2009

IPO activity in the Middle East and North Africa (Mena) declined by a staggering 87 per cent during the first half of 2009 compared to the corresponding period of 2008, data showed.

According to Zawya.com data, Mena markets collectively raised $1.21 billion (Dh4.44bn) in H1 2009, down from $9.3bn during the same period last year.

However, the tide seems to be turning in favour of primary markets with capital raised during the second quarter of this year through initial offerings up 13.5 times from that raised during the first quarter, when capital markets across the world were at a virtual standstill thanks to the global liquidity crunch.

According to Zawya.com data, Mena markets raised $1.13bn in seven IPOs during the second quarter ended June 30, compared to just $83.61 million in two IPOs during the first quarter, reflecting improvement in market conditions.

The Vodafone Qatar IPO, which raised $952m in April this year, was the biggest IPO in the first half of 2009, representing 84 per cent of the total proceeds in the Mena region. It was also the world's largest IPO in 2009 at the time subscription.

The GCC markets were responsible for a lion's share of the capital raised in the Mena markets, accounting for $1.13bn, or 99.8 per cent, of the total $1.13bn raised during the first half of 2009.

GCC IPOs were responsible for raising $8.3bn (89 per cent) of overall capital raised through Mena IPOs ($9.3bn) during the corresponding period of 2008. Thanks to the massive Vodafone Qatar IPO, the newly rebranded Qatar Exchange was the top Mena exchange, accounting for 78.4 per cent of the total capital raised during the period, followed by the Saudi Tadawul (21.1 per cent).

Interestingly, the UAE market, which saw a volley of IPOs in 2008, has not seen a single IPO subscription offer this year.

Telecommunications accounted for 85.2 per cent of the money raised on Mena exchanges during the first half while financial services saw the most number of deals (55.56 per cent).

The average size of IPOs almost halved in H1 2009 compared to a year earlier despite the massive Vodafone Qatar IPO. The Saudi-listed IPO of Weqaya Takaful Insurance and Reinsurance Company is the best performing regional IPO in the past 12 months, with share price appreciation of 188 per cent as of June 29, 2009. Nasdaq-listed Damas International, on the other hand, was the worst performer with share price down 72 per cent. Cash constraints in the initial quarter this year resulted in zero IPOs in Mena markets in the months of February and March.

Also, Noor Takaful Insurance Company's $15.54m IPO in Q1 2009 was extended and then cancelled in May this year as result of low subscription levels of just 12 per cent.

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