DUBAI, 10 January 2008 — Gulf Arab investors plan to sell about $10 billion of stock to the public during the next three years, more than previously forecast, as governments relax the rules, according to an Abu Dhabi-based private equity company.
More than 40 firms have appointed advisers to arrange sales, and another 41 have said they plan initial public offerings through to the end of 2010, Gulf Capital said in a report received yesterday.
“This is mainly driven by ... the liberalization of capital markets, and the regulators are under pressure to ease restrictions,” said Imad Ghandour, who wrote the report.
“The more they liberalize, the more the number of IPOs, as long as business conditions remain on the positive side,” he said.
The greatest value of IPOs will be in financial services, telecommunications and real estate, according to Gulf Capital, which releases the report quarterly. It had calculated in September that investors were looking to raise $7.9 billion through to the end of 2010. More companies have since said they plan IPOs, Ghandour said.
Gulf investors raised a record $10.5 billion last year, a 40 percent increase on 2006, the report showed.
Among the six Gulf nations, Saudi Arabia leads in making it easier for share sales, Ghandour said. The Kingdom last year introduced book-building measures to value shares, including for the IPO of Prince Alwaleed’s Kingdom Holding Co.
Saudi Arabia’s Inma Bank plans to raise $2.8 billion in April in the Kingdom’s largest IPO, and the Saudi affiliate of Kuwait’s Mobile Telecommunications Co plans to raise $1.9 billion in an IPO next month, the bourse regulator said on Tuesday.
“The book-building technique decreases bureaucracy, so this will definitely drive more people to go public,” Ghandour said.
The United Arab Emirates, the second-largest Arab economy, in August relaxed rules, allowing families to retain up to 70 percent of their firms, compared with 45 percent earlier.
Companies in the UAE raised the most — $5.1 billion — among the six Gulf states, compared with $1.8 billion the year before, according to the report. Out of 33 IPOs in the region last year, 26 were in Saudi Arabia, raising $4.8 billion.
Dubai port operator DP World accounted for half the Gulf total, raising almost $5 billion in the Middle East’s largest IPO.
Still, the average size share sales shrank for the first time in at least four years to $319 million from $327 million in 2006, Gulf Capital said. That could rise to an average $401 million during the next three years.
Gulf stocks markets crashed in 2006 when four of the seven bourses in the world’s biggest oil-exporting region lost more than 35 percent of their value. The bourses recovered last year, rising more than 24 percent.
