A slight increase in IPO activity marked the second quarter of this year, offering some optimism for GCC markets with two companies listing on Saudi Arabia’s Tadawul, said professional services firm PwC in its GCC Capital Markets Watch.
Both the UAE’s promising pipeline and Tadawul stock exchange’s development offer some optimism for the GCC market. Despite this, GCC market activity continues to be slow with only two IPOs on Tadawul in Q2 2019, compared with five in the same quarter last year.
Meanwhile, GCC debt market activity was dominated by sukuk issuances this quarter, including sizeable issuances by the Emirate of Sharjah and Islamic Development Bank Trust Services Limited, raising $1 billion and $1.5 billion respectively on Nasdaq Dubai.
This debt issuance activity is expected to continue to Saudi Arabia, which plans to issue $31.5 billion in debt this year to help fund government spending. And of course, Saudi Aramco’s bond issue was by and large the most prominent corporate transaction of the quarter, raising $12 billion.
Steve Drake, PwC Middle East Capital Markets Partner, said: “Geopolitical uncertainty will continue to impact the regional economy. Recent events in the Gulf of Oman and ongoing Brexit uncertainties, among other more recent developments, are cutting the IPO windows even shorter. Companies looking to tap into the equity capital market should get themselves ready early and remain on standby, in order to maximise their chances of a successful IPO.”
He added: “The UAE Cabinet’s recent announcement of sectors and economic activities eligible for 100% foreign ownership is also expected to revitalise market activity in the UAE in the near future. Meanwhile in Saudi Arabia, activity on Tadawul is likely to continue to improve since the exchange and Saudi’s Capital Market Authority latest regulations allowing for GCC-wide cross-listing.”
GGC IPO performance to date
Tadawul and Boursa Kuwait stood out as the better performers, in the year to date, compared to Q2 2018; with the only two IPOs this quarter both listing on Saudi’s Tadawul - Arabian Centres Company and Maharan Human Resources Company.
The record-breaking listing of UAE-based Network International in April this year, which PwC helped to deliver, represents the largest outbound IPO to date from the Middle East and Africa region, on any international stock exchange. The IPO opened a significant premium, valuing the business at over $3 billion and making it the largest IPO on the LSE since June 2017.
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