The Oscar-winner question for the regional outlook on initial public offerings (IPOs) is not whether the Middle East and North African primary markets are stuck in a first quarter hurt locker, as much as whether the rest of 2010 will lift performances up and away or prompt regional investors to dispatch avatars to international markets.
The numbers for March IPOs and the entire first quarter are quickly told. Three offerings were open for subscription from March 22 to 28, all three for Saudi insurance companies, and the amount sought from subscribers equals to just more than $100 million. The three firms — Solidarity Saudi Takaful (seeking $59.2 million), Amana for Cooperative ($34.1 million), and Wataniya Cooperative Insurance ($8 million) — had, as Executive went to print, not released information on the demand commanded by their offerings in the first half of the subscription period.
With neither IPO miracles nor rights issues having presented themselves in the MENA in recent weeks, the region’s total value of initiated and traded new share offerings in the first quarter of 2009 was a humble $178 million — 98 percent of which came from the Saudi listings of Herfy Food Services and Alsorayai Trading Industrial Group.
IPOs that closed in the first quarter but where the stocks have yet to commence trading are the $144 million issuance of real estate firm Mazaya Qatar, and an insurance issue in Tunisia by Assurances Salim, worth $7.1 million. Whereas Mazaya Qatar had difficulties achieving full coverage of the subscription offer, Assurances Salim reported very high demand at 28.5x subscription coverage.
For the first quarter of 2010, the count of newly listed companies on regional bourses is five — one Jordanian and four Saudi — and their price performances since flotation have ranged from 17 percent to 254 percent versus the issue prices, according to Zawya.
Jordanian transport company Ubuor Logistic Services, which had a small over-subscription, advanced 73 percent from the issue price in March trading, whereas Herfy and Alsorayai gained 15.2 percent and 17.4 percent, respectively, since their debuts in February.
Waiting at the red carpet
For April 2010, the only confirmed new subscription dates are for Tunis Re, from April 5 to 16, and for a Saudi appliances maker Al Hassan Ghazi Ibrahim Shaker Co at the end of the month. The Tunisian reinsurance firm will offer shares worth $9.9 million. It appears it won’t be until late May that regional primary markets will see their next exciting premiere, with the $272 million IPO of Saudi city creation firm, KEC Madinah.
With such pickings, investors with strong and urgent cash dispositions may have to look east, where Asian markets promise to drive the IPO production this year. The seasonal blockbuster opening on April 1 — more a heavyweight period drama than high-octane thriller — is the $11 billion IPO conversion of ageing Japanese life insurer Dai-Ichi, from a mutual insurance to a listed company.
Stage fright should not be the issue for Middle Eastern performers, after the corporate players had time to adapt to the rules of the securities game in several strong IPO years up until August 2008. However, market volatility and uncertainty over governance standards — the saga of lost hoards of gold at Damas jewelers has seen a new installment in March on Nasdaq Dubai — are among the reasons why resurgence of Oscar worthy IPO performances might hit the MENA bourses a season or two later than the occasional chief economist of a regional exchange would wish.