Gulf companies gear up to go public

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Dubai DIFC Gate
Dubai DIFC Gate. Middle East’s IPO market is expected to pick up after a lull in the past two years. Photo-Simon Q/Flickr

Financial advisory firm, KPMG, has revealed that market activity has significantly picked up in recent months as at least five Gulf-based companies are all set to launch initial public offerings (IPO) in 2014.

Without providing details, Papriwal, a KPMG partner, stated that at least one of the UAE-based companies was worth nearly USD 1 billion, while another one was valued at an estimated USD 500 million. Speaking to Arabian Business, he said that, “we had about two years where there was hardly any IPO work happening and in the last six months there’s been at least four or five different [companies] that we’re advising on”. These IPO’s are expected to be floated in market within 12 to 18 months.

Financial advisory activity in the UAE has seen a lull period since the market crash in 2008. Since then, there has been no new listing on the Dubai Financial Market or the NASDAQ Dubai. Drake & Scull, a prominent building contractor, was the last company to go public in mid-2008. Last year, the Al Habtoor Group called off its plans to get listed on the market. The deal was believed to be the largest ever public offering in Dubai. Further, Daman Investments also postponed its plan to float its shares in the market to around 2015.

A survey by Ernst & Young shows that market activity in the region has bounced back since last year. During this period, IPO’s in the Middle East attracted investment of about USD 2 billion, twice that of 2011. In February, Qatari-controlled Iraqi mobile telephone operator Asiacell was able to raise country’s largest ever offering, valued at USD 1.24 billion.

Market analysts believe that 2013 will witness great investor interest. The IPO activity is expected to remain high in Saudi Arabia and the UAE. However, even though the market rebounds, not all companies may meet the criteria to get listed on the stock exchange. Smaller companies may be attracted to the market in a bid to build a stronger brand and fuel their growth ambitions. At the same time, some companies may prefer to get listed in the mature markets of New York, London and Singapore.

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