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In sharp contrast with the global situation, the value of IPOs in the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman almost doubled to $11.7 billion in the first three quarters of this year compared with last year's figure of $5.9 billion. This is not to say that the number of IPOs has increased in the Gulf. On the contrary it has gone down.
Globally, IPO activity in terms of number has been much lower in Q3 of 2008 (159 deals) compared with Q2 of 2008 (267 deals) and dropped significantly compared with Q3 of 2007 (440 deals).
Total capital raised in Q3 of 2008 was lower ($13.1 billion) than Q2 of 2008 ($38.2 billion) and significantly lower than Q3 of 2007 ($59.1 billion).
In fact, as global IPO activity sags, the Gulf too is being dragged into the bandwagon of the overcautious.
But Bahrain's Naseej seems to be bucking the trend. The newly set up developer is going ahead with its IPO to raise BD100 million ($265.3 million) despite the global financial turmoil.
"Our business model has not changed (since the crisis started). Either you do it now or you forget about it," says Khalid Abdulla Janahi, chairman of Ithmaar Bank, a Bahrain-based Islamic lender which leads the founders.
"We will be the first mover in the market. That's why we're doing it now," Mr Janahi says.
The founders of Naseej include regional banks and wealthy individuals.
Naseej, which plans to invest BD2 billion over the next three years, will have a paid-up capital of BD250 million, BD100 million of which will be raised through the IPO, which will run from November 18 to December 4.
Naseej's maybe a one-off instance. However, a number of other companies have deferred their IPOs after the financial storm set in.
Abu Dhabi-based Al Qudra Holding in March delayed what would have been the UAE's second-largest IPO less than two weeks after announcing it would start raising $1 billion. Emirates Post has also postponed an IPO it had planned for this year, citing 'current market conditions'.
Future Pipe Industries Group restructured its loan facility and ended up borrowing $165 million from around 12 banks after ditching an IPO in May at the last minute also due to unfavourable market conditions.
Abu Dhabi-based Gulf Capital has postponed its IPO for the next 18 months because of the volatile markets.
Gulf Capital CEO Karim El Solh, says: "I don't think it is a good idea to gravitate towards the national markets. Right now and in the next 18 months, things are a bit unclear. There are lots of volatilities so I don't think it is the optimum time."
"Definitely the IPOs will decline in the short term because of negative sentiment but they will pick up in the long term," says Phil Gandier, managing partner at Ernst & Young Consulting.
Despite a general declining trend, emerging markets continue to drive activity in the IPO market, Gandier says.
Developing countries made up 63 per cent of the number of deals globally, whereas developed countries made up 37 per cent. Developing countries raised 76 per cent of the total global capital raised compared to 24 per cent from the developed economies.
Six of the top ten IPOs and 14 of the top 20 IPOs by capital raised were from emerging markets. BRIC (Brazil, Russia, India, China) countries together raised $3.4 billion (26 per cent of total) in 40 deals (25 per cent of total).
Nasser Saidi, chief economist at the Dubai International Financial Centre, says a host of factors - including liquidity from current account surpluses, opportunities for the region to target more foreign firms and the massive number of family businesses that may go public - guarantees that the prospects for IPOs in the region remain healthy.
While many are feeling nervous, there are some who remain optimistic. Sambacapital said it had 11 IPOs in the pipeline and none of its clients has lost their appetite.
According to the Information and Statistics Committee at the Gulf Venture Capital Association, 151 companies were in the process of going public at the end of September, a record number since it initiated its IPO research in 2006.
