The Middle East region posted exceptional flotation activity during the second quarter of 2007, with 20 companies raising a total of $3.9bn, Ernst & Young has revealed.

The quarter saw the second biggest surge in the past five years in initial public offerings (IPOs) worldwide. Saudi Arabia ranked on top in terms of funds raised, followed by the UAE and Qatar, according to a report by the professional services firm.

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In 2006, $8bn was raised through 45 IPOs in the Middle East, whereas the region has seen $4.8bn being raised through 33 offerings in the first half of 2007. Globally, 531 IPOs closed during the second quarter of 2007, raising $88bn. Of the 531 IPOs across the globe during the period, 20 were in the Middle East.

Azhar Zafar, head of M&A services at Ernst & Young Middle East, said: “The three largest offerings in the second quarter of 2007 were Saudi Kayan Petrochemical Company’s offering of $1.8bn, followed by Deyar Development Company’s offering in UAE of $883m, and Saudi Arabia’s Jabal Omar Development Company offer of $537m. This reflected the growing capital base and confidence in the regional capital markets to date.”

According to Omar A Bitar, Ernst & Young’s managing partner of business advisory solutions for the Middle East, the report reveals that much of the IPO activity globally was driven by emerging markets; Brazil, Russia, India and China together raised $35bn in 90 IPOs and accounted for four of the five largest IPOs in the second quarter.

Anticipating that the Middle East, also as an emerging market, will experience growth in terms of IPO performance, Mr Bitar said: “The Middle East is expected to continue to grow in the next few years, with many IPOs waiting in the pipelines. There is great potential for the region to increase the level of funds raised, especially as it continues to successfully experiment with allowing multiple IPOs to hit the market simultaneously.”

Of the $88bn raised during the second quarter of 2007, capital raised by companies in the US, China and Russia made up about half of the global total, raising $15.7bn, $15.5bn and $11.7bn respectively. In terms of the highest number of IPOs, Australia led the way with 66, ahead of the US (59) and China (50).