In 2009, markets were battered by a seemingly never-ending series of financial crises — burst bubbles, financial meltdowns, soaring oil prices, credit crunches and falling home equity. These crises have weighted down the initial public offering market since 2008, and yet, the regional IPO pipeline is full — 150 companies have already announced IPO plans for 2010 and beyond.
Analysts say that with pent-up demand for equity, a large pipeline of deals and realistic sellers, there is every reason to believe that 2010 will be the beginning of an active and profitable period for IPOs.
According to available data, a number of regional companies plan to list this year, reopening a market that has been virtually shut even as investors lapped up billions of dollars worth of newly issued bonds across the Middle East and North Africa region.
While regional and global investors nurse their wounds over Dubai World’s debt problems, there are scores of opportunities if one looks beyond the immediate crisis. With many of Dubai’s state-owned entities restructuring and struggling to keep their finances in order, the government may look to offload some of these assets, say analysts.
“A number of government-linked companies, such as Dubai World and Nakheel, have generated spectacular growth for the emirate’s real estate, shipping, transport and financial sectors over the past two decades,” notes a Societe Generale report. “Now part of that constellation of companies could be broken up as Dubai struggles under its heavy debt load. In some cases, firms could be dismembered or partially privatized.”
Many Dubai Holding and Dubai World entities can be knocked into shape for a public offering — Dubai International Capital, Jumeirah Group, TECOM Investments, and Dubai Group from Dubai Holding are assets that many investors would love to have in their portfolio… if they believe in the long-term Dubai story, say analysts.
Similarly, partial privatization or offering Dubai World’s Jebel Ali Free Zone and Istithmar World to the public may help the Dubai government raise finances, trim costs and focus on governance and infrastructure.
Meanwhile, new IPO announcements that came out at the end of December include big names such as Bahrain’s Gulf International Bank, with plans to float some of its shares in 2011, and Afghan carrier, Safi Airways, which is planning to launch an IPO within the next three years and list the company on one of the UAE’s stock exchanges. Abu Dhabi-based Tasheed Holding, a food and beverages conglomerate, said that it plans to launch an IPO in 2012 without providing additional details.
In Saudi Arabia, the hottest IPO market in the region, the Capital Markets Authority, or CMA, said it approved initial public offerings for three Saudi firms early next year. The Saudi homegrown fast food chain Herfy Food Services will offer 8.1 million shares January 11 through 17.
Al Sorayai Trading and Industrial Group plans to sell 9 million shares between February 1 and 7, while travel agency Al Tayyar Travel Group will offer 24 million shares on February 22 through 28.
In North Africa, Egypt’s private equity fund, Citadel Capital, which manages a portfolio of $8.3 billion worth of investments across 12 countries, said it would offer 12.5 percent of its shares to raise fresh capital. The company, which will be listed on the Cairo Stock Exchange, has not yet provided a date for the IPO.
Libya, not well known for IPO announcements, is putting the final touches on plans to privatize two state-owned firms through an IPO scheduled for the first half of 2010 said Soliman Shehoumi, chairman of the Libyan Stock Exchange.
Shehoumi said that an Iron and Steel Company and National Commercial Bank are schedule to go public “in the near future,” but he did not specify how much of the companies will be offered to the public and how much the government is seeking to raise.
The National Commercial Bank was scheduled to launch an IPO for a 15 percent stake of the company’s share in 2008, however, the plan did not move forward with officials citing technical delays. Central Bank Governor Farhat Omar Bin Guidara said earlier this year that the government would sell a 15 percent stake in the bank, worth $40.5 million, in 2009.
Although no one can predict the future, analysts say conditions in the global IPO market in 2010 are set to noticeably improve, particularly in comparison with 2009. However, the real rebound is not expected until mid-2010.
The IPOs of 2009
Economic fluctuations in Palestine
Palestinian Securities Exchange (PSE) has approved IPOs and the listing of four Palestinian companies for early 2010, with an estimated total value of over $200 million, said PSE Chief Executive Officer Ahmad Aweidah in December.
Wataniya Mobile, with $180 million of capital, will offer 53 million shares in February 2010, while the Arab Palestinian Investment Company (APIC) is planning a capital increase by $12 million to $70 million through an IPO.
Amaar Real Estate Group, the Palestine Investment Fund’s real estate development arm, with $220 million of capital, is the third company to launch an IPO on PSE, Aweidah said.
Club Deportivo Palestino, the Palestinian community’s first division soccer team in Chile, plans to launch its IPO by issuing 2 million shares at a price of $1 per share, raising its capital by $2 million to $20 million.
Palestino Club, the only western company to be listed on the PSE, is also planning to be listed on Santiago Stock Exchange in Chile.
Aweidah also revealed that there are ongoing discussions with 15 family-owned companies to encourage and prepare them to list on the PSE.
“Despite being the newest stock market, the PSE is the most advanced one in the Arab countries on the technical level,” said Ahmad Aweidah.