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Growing appetite for family business IPOs in MENA

Middle Eastern and North African family business are expected to show a strong appetite for initial public offerings this year, building on an uptick in listings seen in 2013, according to a merger and acquisitions expert.

Last year, 23 Middle East and North Africa (MENA) family and non-family businesses raised $3 billion (€2.2 billion) through public listings, up 64% in volume and 51% in value compared to 2012.

Ernst & Young’s transaction advisory services leader for MENA Phil Gandier said the momentum for initial public offerings (IPOs) looks set to continue over the next nine months, with a strong pipeline of businesses preparing to list.

“It usually takes companies 12 to 18 months to get ready to float and there is plenty of preparatory work under way. If the macroeconomic conditions in the region continue to improve, the next 18 months to two years will be quite busy," Gandier said.

Family businesses look to IPOs

He said family businesses in particular are increasingly looking to IPOs to monetise wealth, raise capital and institutionalise the business.

The largest IPO in 2013 was Asiacell Communications in Iraq, which raised $1.3 billion – the largest listing for the region since 2008.

The MENA country with the most IPOs in 2013 was Tunisia, with nine public listings. This was followed by Saudi Arabia with five, and four in Oman.

More MENA IPOs heading offshore?

The United Arab Emirates (UAE) led the charge in the fourth quarter, however, with three IPOs, and also had the largest public listing in the region for this period.

Damac Real Estate Development raised $348 million on the London Stock Exchange. The residential, leisure and commercial property developer is part of Damac Group, which is controlled by the Sajwani family.

Gandier said it would be interesting to see if more issuers decide to list on foreign exchanges in the coming year, and said the recent upgrading of Qatar and UAE to emerging markets by market index company MCSI may help to boost interest in the region.

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