Regional companies are running toward their local public markets, leaving a trail of prospectuses behind them and welcoming individual and institutional investors from across the Middle East and abroad to partake in the region’s new found stable equity markets. The IPO market in the GCC continues to experience a flurry of new IPO announcements and, in the month of February, analysts say that a new record of announced, planned or in progress IPOs are in the works.
Starting with the region’s largest economy, Saudi Arabia, had five IPO announcements in February. Although in terms of value, the announcement s are not big, the number of companies jumping on the IPO bandwagon speaks a lot about the current psychology and mood in the kingdom’s stock market. Most worthy IPO news is the announcement by the kingdom’s fixed-line telecommunication companies, who won the licenses in late 2007, revealed their plans to offer 25% of their shares to the public in the second quarter of 2008. Atheeb Telecom, Optical Communication Co. and Al-Mutakamila who have a combined capital of more than $801.1 million, did not provide additional information on the offering.
In the food sector, the Saudi-based Herfy Food Services, a unit of Savola Group, announced plans in mid-February to sell 30% of its shares in an initial public offering. Herfy which has a capital of $27 million is expected to receive the regulator’s approval for the IPO, in March. In the transportation sector, Al-Bassami International said it will offer 30% of its shares to the public, in the second half of 2008. The company said it plans to raise its capital to $106.8 million. Saudi-based National Air Services, better known as NAS, said that it plans to launch an IPO by the end of 2008, in an effort to raise around $4.5 billion to expand its fleet over the next five years. Although NAS did not disclose more information on the offering, analysts expects this IPO to create a lot of excitement on the market and even some controversy. Meanwhile, in the petrochemical industry, Saudi Industrial Investment Group launched, on February 23, a $600 million rights issue to double its capital to $1.12 billion. The move comes as part of the company’s plan to acquire a petrochemical firm. Saudi Industrial Investment offered 225 million shares at $2.67 each to existing shareholders subscription. The IPO is expected to close on March 5.
Moving to the region’s hottest economy, the UAE came in second this month with three IPO announcements. The newly-established Islamic lender, Ajman Bank, said it will raise $149.9 million by offering 550 million new shares or 55% on the Dubai Financial Market in April. The price per share will be $0.27, valuing the bank at $272 million. Subscription opened on February 17 and the closing date is scheduled for February 27. In Abu Dhabi, Al-Rayan Investment said that it will launch an initial public offering in 2008. But the company’s chairman, Fardan al-Fardan, refused to provide further details until the full plan for the IPO is complete.
In tiny Bahrain, Voltamp Manufacturing Company, a producer of power transformers and switchgear, said it will launch a $88 million IPO, sometime in April. The company has fixed the share price at $1.40 with a nominal value of $0.26. Voltamp is 57.42% owned by Al-Anwar Holdings, an investment company listed on the Muscat Securities Market. Krishna Kumar Gupta, CEO of Al-Anwar Holdings, told reporters that Voltamp’s enterprise value is estimated at $70 million.
In the Levant, two noteworthy announcements were made in February. The first being Lebanon’s Fransabank, which revealed on February 26 its Damascus-base unit, Fransabank Syria, has launched an IPO valued at $12.1 million. Fransabank Syria is offering 1.26 million shares or 36% of its total shares at $9.87 each. The share price consists of the par value without an issue premium. The IPO is expected to close on March 13. The second IPO, is Jordan’s Darat Jordan Holdings, which plans to offer 26.6% of the or 4 million shares to the public starting on March 3rd. Darat who has appointed Jordan Investment Trust as the lead manager is looking to raise around $28 million. The company said the proceeds will be used to expand its real estate portfolio.
The favorable outlook for the IPO market in 2008 has heightened interest of individual, institutional and foreign investors in the region’s markets. Of course the GCC markets continue to garner the largest share of investment, but analysts say North Africa is not doing too bad. In the Levant there is still much more development and maturing to do, but once political stability is realized the Levant is set to catch up quickly to its neighbors. Observers say that the overall performance of the IPO market in 2008 so far has been promising and many are betting on a new record year.