UAE First-time stock sales raise over $1billion
A total of four initial public offerings (IPOs) raised more than $1 billion on the GCC stock exchanges during the second quarter of this year compared to three IPOs which raised $340 million in the same period last year, a report said.
New listings, although limited to only a few regional exchanges, have helped to soak up some of the excess liquidity in the region and attract investor appetite, according to PwC's latest Capital Markets report.
The average IPO offering value rose to $276 million in the quarter compared to $39 million the first quarter and $133 million in the second quarter of 2011.
The debutants this quarter included Al Tayyar Travel Group, a family business in the travel and tourism sector and Saudi Airline Catering Company, the catering unit of Saudi Airlines, raising $365 million and $354 million on the Saudi stock exchange respectively.
Despite the weak global equity market outlook and falling oil prices, the IPOs received an overwhelming response in the market signifying improving investor confidence.
Other notable issuances during the second quarter included a $227 million IPO by Najran Cement Company also on the Saudi stock exchange and the Bank Nizwa IPO, a newly established Islamic bank in Oman, raising $158 million and which may well pave the way for future IPOs of other start-up Islamic banks on the Muscat Securities Market.
'Whilst IPO activity in the second quarter of the year could be seen to be encouraging, it is still difficult to determine if we are seeing any real recovery,' said PwC Middle East capital markets head Steven Drake.
'With what is happening in the euro zone and the slowing of some of the high growth markets such as China and India, it is difficult to determine the impact this will have on our regional markets.
'We continue to see a strong pipeline in Saudi Arabia and would expect some more companies come to market later in the year as long as share prices remain stable.
'Our outlook for the rest of 2012 is for a continued IPO upward trend in the Saudi Arabian market with perhaps limited to no activity on other regional markets,' he said.
The GCC debt market remained strong during the first half of the year with conventional and Islamic issuances collectively performing better than in the same period last year.
The region's financing needs remain strong due to the heavy infrastructure development plans and refinancing needs to service existing debts, according to the report.
Sukuk continued to outperform conventional bonds in the region this year with Saudi Arabia and UAE being the most active.
'The debt markets in the GCC seem to have remained largely impervious to global economic instability due to continued government support of these issuances,' Drake said.
'Despite fluctuating oil prices and turmoil in other markets, the GCC continues to remain of interest to both regional and international investors looking for exposure to regional fixed instrument securities,' he added.