04/02/2015 06:47 AST
Initial public offering (IPO) activity in the Gulf Cooperation Council (GCC) showed strong signs of recovery in 2014 where IPOs reached $7.3 billion, bringing activity to its strongest levels since the financial crisis which slowed down equity capital markets’ performance, the PwC’s Capital Markets team found.
Improved market performance and macroeconomic fundamentals as well as a conducive regulatory environment were all contributing factors to positive market sentiment and investor appetite, encouraging issuers to execute their IPO plans, the team noted.
The fourth quarter of 2014 witnessed a total of five IPOs in the GCC, raising $ 7.3 billion – leading to a considerable increase as compared to the same quarter last year which saw a total of three IPOs raising $179 million.
IPO performance during Q4 2014 was also stronger than the previous quarter, which saw a total of two IPOs raise $ 1.6 billion.
The floats during Q4 included: National Commercial Bank which listed on the Saudi Stock Exchange, Tadawul, which raised $ 6.0 billion, making it the largest IPO during 2014 in the GCC; Dubai Parks and Resort PJSC, which listed on the Dubai Financial Market (“DFM”), and raised $ 695 million; Amanat Holdings PJSC, another DFM listing, raised $ 382 million; Electrical Industries Co., which listed on Tadawul, and raised $ 194 million; and Al Maha Ceramics, which listed on the Muscat Stock Exchange, and raised $ 21 million.
Looking at the IPO performance for the year, a total of16 companies went to market, raising total proceeds of $10.8 billion, compared to 2013 when a total of nine offerings raised $ 702 million. Out of the total $10.8 billion raised during 2014, 68 percent was in Q4. The first half of 2014 witnessed a total of nine offerings raising $ 1.9 billion while H2 witnessed seven offerings raising $ 8.9 billion. H1 was therefore stronger in terms of number of offerings while H2 was stronger in terms of total offering value.
In 2014, Saudi Arabia and the United Arab Emirates played leading roles in terms of IPO activity with Saudi Arabia accounting for 38 percent of the total number of IPOs and 63 percent of total proceeds raised, and the United Arab Emirates accounting for 31 percent of the total number of IPOs and 27 percent of total proceeds raised. Tadawul continues to be the most liquid exchange in the region, and PwC forecast activity to flourish in the UAE, specifically on DFM during 2014.
Over recent years, PwC expects increasing interest from regional based companies floating on the London Stock Exchanges such as Gulf Marine Services, Al Noor Hospitals Group, Damac Real Estate Development Limited and Action Hotels plc.
Steven Drake, Head of PwC’s Capital Markets team in the Middle East region said: “In 2014 we saw some impressive offerings such as the amount raised by NCB proving that the appetite for IPOs in the region had recovered. With oil prices at relatively low levels and a number of regional market indices lower than we have seen recently, the real challenge is whether or not investor appetite will remain. We should soon know the answer to this question as scheduled Q1 2015 IPOs look to come to market.”
For more on this
Click Here
Saudi Gazette
Please wait...
