There’s an IPO drought in the Gulf

July 11, 2013
July 11, 2013

Record inflows of foreign capital, and the UAE’s and Qatar’s elevation to “emerging market” status, can’t seem to breathe life into the Middle East’s primary markets. In the second quarter of 2013, only three companies issued shares on Gulf exchanges, to raise a total of just $48 million, according to PricewaterhouseCoopers (PwC). In the same quarter of 2012 there were only four issues but they were much bigger, mopping up over $1.1 billion.

IPO chart

PwC attributed the IPO slowdown to global economic worries and political instability in Egypt and other countries in the Middle East. But oppressive regulation and the complexities of family-run businesses maybe also at play. According to consultancy firms KPMG and Ernst and Young, more than 50% of all UAE-based family business that begin preparations for an IPO end up abandoning them for fear of family squabbles becoming public and patriarchs losing control. Regional financial services firms like Daman Investments also believe that the laws governing IPOs are too restrictive for smaller and less profitable companies to tap the capital markets.

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