Published: January 5, 2012
Solving eurozone problems will boost regional deal flow, says Ernst & Young.
A resolution to Europe’s debt crisis in 2012 will help MENA’s IPO market recover following a poor performance last year, Maria Pinelli, Ernst & Young’s global vice-chair of strategic growth markets, has said.
MENA’s IPO market raised US$843.9mn in 2011, a 69.3% decline on the US$2.8bn raised in the previous year, according to figures released by the accountancy firm. Yet companies continue to plan stock market debuts – Oman Power & Water Procurement Company, broadcaster Al Jazeera and Kuwaiti publisher Al Waseet International are all planning IPOs in 2012, according to reports.
“The key to the IPO market recovery lies in the speedy resolution of the European debt crisis, which is likely to have a stabilising effect on the global capital market and restore investors’ confidence,” Pinelli said.
Phil Gandier, Ernst & Young’s MENA head of transaction advisory services, added that companies chose other fundraising routes over IPOs in 2011, such as sukuk issuance, and that this may not change soon. “Investors and issuers in the region remain concerned over the volatility of capital markets and this will likely continue in the next quarter,” he said.
“However, the number of announced IPOs continues to grow across the region. The moment economic conditions and investor sentiment improves, we could see a flood of IPOs in the regional bourses.”