The tumbling oil prices have had a key impact on the MENA region’s financial activity, especially with the failing to garner interest in initial public offerings in the January 2015, according to a report released by Zawya monitor.
The report, written by investment monitor Peter Aboud, said that only US$61.95 million was raised in January 2015 from three rights issues; that of Al Alamiya for Cooperative Insurance Company, Misr Chemical Industries and Vertika. Aboud considered it a bad start for the year and, possibly, for the whole of the first quarter.
Aboud pointed that in 2014 had recorded the highest capital raise since the 2008 financial crisis and many companies announced plans to list in 2015, the uncertainty over oil prices has led companies to adopt a “wait and see” approach, but companies could still launch their IPOs when oil prices stabilize.
The report said that the only IPO that had been set to take place was delayed which was of fleet manager Massar Solutions on the Abu Dhabi Securities Exchange, compared to four IPOs in January 2014 that raised total capital of $360.95 million.
According to the report the UAE media attributed the delay to the insufficient interest in the $156.8 million offering (240 million shares at a price of 2.4 Emirati dirhams per share) during the subscription period from the period 11-25 January.
"Initially, there had been significant interest in the Massar IPO based on the transportation company’s consistent growth and strong performance," Aboud said. "However, the drop in oil prices has increased volatility on regional stock markets and left many investors on the sidelines."
