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IPOs to boom in GCC

The region is set to see a 15 % increase in Initial Public Offerings (IPOs) in the next twelve months according to Oxford Business Group (OBG), the UK based publishing, research and consultancy organisation.

Following a slowdown in IPOs that reflected a downturn in the market in the second part of 2006, there are several major players lining up to take advantage of the improving market conditions, according to Andrew Jeffreys, OBG’s Editor in Chief. “We expect prices to return by summer 2007 as price per earnings ratios rise to more realistic levels following significant undervaluation of shares in several market sectors.

“This lack of confidence in the market led to a number of high profile delays across the region, including Oger Telecoms, which pulled its US$ 1.25bn IPO because of increasingly challenging and volatile regional market conditions.

“Of course, pricing is key. We saw several IPOs that were oversubscribed multiple times – and widely reported as a great success. They may be successful for investors who experience immediate gains, but the owners of these firms often feel they have been undersold,” said Jeffreys.

Despite such factors, pan-Gulf interest in IPOs remains at an all time high as companies look for ways to raise capital to fuel investment. Says Jeffrey’s “We are likely to see IPOs across diverse market sectors to include not only real estate and energy but trading and finance too.

“The mechanism for going public is fairly new to this region so there is a natural learning curve for companies and a need to proceed correctly in order to ensure the long-term, positive contribution of IPOs to the region’s economies.

“For those organisations that adhere to the improving regulatory framework and follow best practice, the benefits go beyond the additional capital investment necessary for business growth and sustainability to include greater corporate governance and transparency.”

Jeffrey’s comments follow his chairing of the 2nd conference dedicated to the public listing of Gulf companies, the ‘GCC IPO Summit’. Among the 100 leading industrialists who took part were Rajiv Nakani, Head of Investment Banking, Global Investment House, Philip Turberville, Chief Executive, RAK Petroleum and Graham Dallas, Head of Investment Banking, the London Stock Exchange.via Al Bawaba

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