[2008-03-27]  Supply of Gulf IPOs rises to meet investor demand
United Arab Emirates interior contractor Depa United Group has revealed plans to raise $400 million through a flotation in Dubai and London by the end of April as the supply of Gulf listings catches up with investor demand.

Depa's announcement follows the news Tuesday that U.K.-based mobile operator Vodafone Group PLC has revealed plans to float as much as 40% of its Qatari subsidiary this year.

Vodafone and Qatar Foundation, a private nonprofit organization, were awarded the country's second mobile-operator license last December. As part of the agreement, they must form a holding company and float a minority stake in this new entity on the Doha Stock Exchange this year.

Vodafone said it would sell a stake of about 20% to 40% in the subsidiary ahead of its operational launch before the end of the year. The mobile group hasn't yet said which banks will be arranging the share sale, and it declined to comment on the amount that it hopes to raise.

Investor demand for flotations by companies from the Gulf Cooperation Council -- an economic and political policy forum that includes Bahrain, Kuwait, Qatar, Oman, Saudi Arabia, and the UAB -- has continued to outstrip supply despite volatility in global equity markets this year. State-owned oil company Qatar Petroleum raised $2.45 billion when it floated its Gulf International Services unit March 23 and investor demand outstripped supply five times.

The $1.23 billion initial public offering of Saudi Arabian oil company Petro Rabigh in January, which was four times oversubscribed, had been the region's largest deal this year until the Qatar Petroleum float.

Oversubscription levels have fallen from a peak in 2005 when demand outstripped supply by 73 times on average, according to data from Abu Dhabi-based private-equity firm Gulf Capital. Investor demand for IPOs was 6.3 times greater than the shares on offer last year.

The closer match between rates of supply and demand reflects the increasing number of Gulf listings and also an increase in their average size, which grew by 25% in 2006 and by 11% last year.

There are 42 Gulf companies that have appointed advisers to arrange flotations since the start of 2007, and a further 41 companies have announced plans to list in the next three years. These pending issues are estimated to raise $10 billion, according to research by Gulf Capital. Based on available data, the average size of floats in the region is estimated to increase 11% between 2008 and 2010.
Source: Copyright © 2008 Dow Jones & Company, Inc.