A woman walks past the entrance to the Dubai Financial Market. The DFM General Index more than doubled last year, outperforming all benchmark measures in the 50 largest equity markets globally on a dollar basis, pushing valuations to near a five-year high, according to data compiled by Bloomberg.

Bloomberg/Dubai

Morgan Stanley, owner of the world’s biggest brokerage, is predicting the return of initial public offerings worth more than $1bn in the Gulf after asset values and stock markets rallied.

“We expect to see two to three billion dollar-plus IPOs in the second half of this year out of the Gulf region,” Klaus Froehlich, head of investment banking for Morgan Stanley in the Middle East and North Africa, said on Sunday in an interview at the bank’s Dubai offices, declining to say if it was involved in any deals. “It’s a renaissance of the local IPO market.”

Dubai’s benchmark index, the world’s best-performing stock measure in 2014, surpassed 4,000 points on Sunday for the first time in five years as economic growth and rising oil prices drive demand for assets in the region. Qatar Petroleum raised QR3.2bn ($879mn) last month selling shares in its Mesaieed Petrochemical Holding unit, while Dubai-based Damac Real Estate Development generated $348mn in December through the sale of global depositary receipts in London.

Government-related entities and large family companies are returning to equity markets after a five-year hiatus, according to Froehlich. Some older deals are being revived because of better trading conditions and risk appetite, he said.

“Valuations and volatility are at a good place right now so we’re in a sweet spot,” he said. “We’ve actually been in this sweet spot for about a year in this region, but people are finally recognising this and want to do something about it.”

The DFM General Index more than doubled last year, outperforming all benchmark measures in the 50 largest equity markets globally on a dollar basis, pushing valuations to near a five-year high, according to data compiled by Bloomberg.

Arabtec Holding, the largest listed construction contractor in the UAE, said on Sunday it will set up Arabtec Capital in the Dubai International Financial Centre to provide financial and public offering services.

The six-member Gulf Co-operation Council generated IPOs valued at $1.1bn last year, compared with $15.4bn in 2007 before the financial crisis, data compiled by Bloomberg show.

Port operator DP World Ltd, a unit of Dubai World, raised $4.96bn in November 2007 in the Middle East’s largest IPO. That offering was 15 times oversubscribed and the last such deal valued at more than $1bn in the UAE. Since then, the region’s largest IPOs have been in Saudi Arabia, where foreign investors can’t invest directly.

Saudi Arabian Mining Co, the metals and minerals producer known as Ma’aden, raised $2.47bn after selling a 50% stake to the Saudi public in July 2008. Zain Saudi Arabia, a unit of Kuwait-based Mobile Telecommunications Co completed a $1.9bn share sale in February 2008, according to data compiled by Bloomberg.

Qatar Petroleum’s MPHC offering was the country’s biggest share sale since Vodafone Qatar raised $928mn in 2009, according to data compiled by Bloomberg. Damac’s sale was the first IPO by a Dubai-based developer since the emirate’s property crash in 2008 and followed the London listings of Abu Dhabi-based health-care providers Al Noor Hospitals Group in June and NMC Health in 2012.

“Often companies that are looking at an IPO of a larger size initially look at going abroad to get the international recognition and potentially more flexibility on pricing,” Froehlich said. “But people are also very conscious of where they come from which means many are also looking at dual listings.”