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ANALYSIS

Regulations, lack of liquidity ‘hitting GCC IPOs’

Beirut, May 21, 2013

Stricter regulatory scrutiny of companies with plans to list and a lack of liquidity in certain markets are the key factors responsible for the low volume of IPOs in the GCC in the last 12 months, experts said.

Other issues hitting the IPO issuances included changes in capital raising regulations and regional unrest in some Mena countries, added experts from Deloitte Middle East, a audit, tax, consulting, and financial advisory services firm, noting that Saudi Arabia lead the league table with five listings over $100 million.

However one thing is clear, there is a strong pipeline of issuers looking to launch an IPO (initial public offering) as soon as the right window of opportunity arises, said Declan Hayes, managing director at Deloitte Corporate Finance Limited in the Mena region.

“We continue to see successful regional management teams coming to us to discuss their potential IPO options, both in the region and internationally. There is a noticeable increase as compared to last year,” Hayes added.

“There is an encouraging number of corporates looking to raise equity capital on international stock exchanges, such as London and Singapore, both due to their equity story and the interest that the Middle East region is attracting from both Western and Far Eastern investors.”

Deloitte was advisor to the Board and management on the successful premium listing of NMC Healthcare, an Abu Dhabi based healthcare provider on the London Stock Exchange which raised $180 million and placed NMC in the FTSE 250 rankings.

Deloitte’s role involved advising and assisting NMC management throughout the pre-listing and listing process to ensure the transition from a private to a publicly listed company took place with the least amount of disruption to the business, and that activities were well coordinated with the Sponsor and other advisors.

“Corporate management teams and private shareholders are recognizing the need to prepare well ahead of a potential listing to increase their chances of maximizing value for shareholders and to avoid major disruption to the day-to-day running of the business,” said Adnan Fazli, director in the capital markets team at Deloitte in the Middle East.

“We are actively working with the management teams at a number of clients looking to fast track their internal readiness to list.”

The AsiaCell IPO on the Iraq Stock Exchange which raised $1.3 billion in January 2013 – the biggest in the Middle East since 2008 – is a validation of the positive impact readiness can have on the speed of clearing regulatory reviews and the valuation achieved.

“Of the corporates we are working with, at least five would likely have a market cap of over $1 billion in a 2015 listing on an international stock exchange while a number of others are likely to be regional issuers on the local stock markets,” according to Hayes.

“Whether a business is contemplating a listing on the Tadawul, ADX, Bourse Dubai, MSM or a future SME market (as has been tabled in Doha and Dubai), a company’s readiness to list will be the key differentiating factor between those that are first past the finish line when the IPO window opens,” he concluded. – TradeArabia News Service




Tags: IPO | GCC | liquidity | Regulations | Stock Exchange | unrest | Deloitte |

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