Middle East IPOs Double After Saudi Boost, Ernst & Young Says

The Middle East and North Africa’s pipeline of initial public offerings may be improving after Saudi companies helped the region more than double sales this year to $2 billion, Ernst & Young International said.

Share sales in the region gained from $844 million in 2011 “hinting that the markets are inching towards better results,” the consultancy said in a statement today. Companies in Saudi Arabia, the largest Arab economy, raised the most in 2012 after seven sales valued at a combined $1.4 billion, Ernst & Young said. United Arab Emirates companies came in second with $277 million, while Oman was third with $264.4 million, it said.

“The outlook for 2013 will be to a great extent influenced by investor sentiments, against the backdrop of regional developments,” Phil Gandier, head of transaction advisory services for MENA, said in the statement. “Saudi Arabia and the U.A.E. will continue to be the regional hubs of IPO activity for investors in 2013.”

Arab uprisings that ousted leaders in Tunisia, Egypt, Libya and Yemen, as well as Europe’s debt crisis, slowed regional share sales in the past two years. Saudi IPOs have picked up as companies sought funds amid government plans to invest more than $500 billion to build infrastructure, develop industry and create jobs.

The benchmark Tadawul All Share Index advanced 7.4 percent this year after falling 3.1 percent in 2011, while average volumes on the exchange rose to 346 million shares from 213 million, according to data compiled by Bloomberg. Trading volumes for Dubai’s benchmark index have averaged 160 million shares this year after a two-year slump took them to 67 million shares for 2011, the lowest since 2006.

In the fourth quarter, MENA companies raised $339.8 million from share sales, up 50 percent from the year-earlier period and compared with $252.3 million in the third quarter, Ernst & Young said. Dallah Healthcare Holding Co. raised $144 million in Saudi Arabia, the region’s biggest IPO in the fourth quarter, while Al Izz Islamic Bank sold $106 million of shares and listed them on the Muscat Securities Market.

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