The month of July and August marked the start of the summer and Ramadan period with the expected slowdown in Initial Public Offering (IPO) activity in the Gulf Corporation Council (GCC) with lower available trading days and activity on the regional exchanges. The only listing witnessed in Q3 2012 was that of City Cement Company from Saudi Arabia which raised USD 252 million in mid September. This represented a marginal increase of USD 33 million or 13% in amounts raised compared to the same period last year where two IPOs in Saudi Arabia raised USD 219 million. Despite the relatively quiet third quarter performance, the 2012 year to date (YTD) results were significantly ahead by USD 857 million or 148% compared to 2011.
Steven Drake, Head of PwC Capital Markets in the Middle East region said: “Given the macro-dynamics of the GCC region, the summer and Ramadan months are generally slow in terms of IPO activity. We are seeing growing issuer interest in equity marketsparticularly in Saudi Arabia stimulated by improving oil prices, strong corporate earnings and continued infrastructure needs. We don’t expect to see significant activity in Q4 2012 although prospects for FY13 now look better than they had been.”
As anticipated in Europe, low activity in the first two months of this quarter reflected the traditional summer lull and London being quieter due to the Olympics. If recently announced transactions do successfully complete and perform well in the aftermarket, this will go some way to boosting investor confidence in European IPOs.
London saw a strong end to the quarter, with the Main Market IPO of Sberbank, the largest commercial bank in Russia, raising $5.2 billion through its offering of ordinary shares and global depository shares. TheEuropean IPO activity in 2012 YTD was rather disappointing, with a total of 48 IPOs raising USD 6.6 billion.
Unlike equities, the GCC bond market remainedundeterred through the summer periods with a strong third quarter performance on both sovereign and corporate fronts. National Bank of Abu Dhabi issued a USD 750 million bond during the month of August which underpinned the strength of the debt market in the region. One of the significant sovereignissuances during the quarter was from the Kuwait Central Bank which issued a series of bonds amounting to a total of USD 5.4 billion.
The sukuk market continued to trend upwards during the quarter augmented by growing investor appetite for Islamic debt financing as the region continues to spend heavily on infrastructure development.Amongst the prominent issuances in the quarter was the sovereign SoQSukuk A QSC issuance which raised USD 4 billion in two tranches. On the corporate side, both Emaar Sukuk Limited and EIB Sukuk Company issued USD 500 million each.