The initial public offering (IPO) market in the Gulf Cooperation Council (GCC) in the second quarter (Q2) of 2014 started off and ended on a high, with a total of seven IPOs, compared to two in Q1, 2014, PricewaterhouseCoopers said in a statement yesterday.
The quarter witnessed its first IPO in April with the UAE based company, Emirates REIT Ltd, listing on Nasdaq Dubai Ltd and raising $201m. Also in April, Marka PJSC, a UAE based company, listed on the Dubai Financial Market raising $77m.
The Saudi Arabian Stock Exchange, Tadawul, witnessed three IPOs in Q2 by Umm Al Qura Cement Company, Abdulmohsen AlHokair Group for Tourism and Development Co and Al Hammadi Company for Development and Investment raising $73m, $220m and $168m, respectively.
In Oman, there were two power company listings, Al Suwadi Power Company SAOG and Al Batinah Power Co SAOG, raising $84m and $78m, respectively.
The total value of the seven IPOs in Q2 was $902m, a slight decrease of 5 percent compared to the first quarter of 2014, although this is a considerable increase compared to the same quarter last year where a total of three IPOs raised $48m.
Looking at IPO performance for the first half (H1) of 2014, there were a total of nine IPOs raising $1,855m, compared to a total of five IPOs raising $385m in H1, 2013, an 80 percent increase in volume and 381 percent increase in value.
IPO performance and activity in H1, 2014 and the positive responses from investors is a testament to the recovery of confidence in the market by both issuers and investors. The outlook for IPOs in the GCC appears to be strong particularly looking towards the latter part of 2014 and into 2015.
On the cross border front, the trend seems to continue with regional companies looking to list on international markets. However, Q2 proved to be challenging as we saw several companies postponing their planned IPOs despite the recovery in markets. Steve Drake, Head of PwC’s Capital Markets in the Middle East region said: “Equity capital markets performance in the region in the H1, 2014 improved considerably with a total of nine listings, of which two were on the UAE stock exchanges which shows signs of recovery in that market. However the average offering value is still relatively modest albeit it has improved compared to the previous year. Looking ahead, the remainder of 2014 looks very strong and we would expect to see this continue into 2015. ”
The GCC debt capital markets in 2014 had an active second quarter, particularly in corporate bonds and sukuk, with large size deals that received a positive response from investors which was demonstrated by the tight yields achieved.
Other noteworthy issuances include Commercial Bank of Qatar issuing a $750m bond and the Bahrain based, Gulf International Bank, issuing a $533m bond. Also in Q2 2014, the Qatar Central Bank issued three government bonds amounting to $261m, $577m and $261m.