Buoyed by the success of Saudi Nomu, the inaugural parallel market in the GCC region, the first three months of 2017 witnessed a five-year record high in number of IPOs with 10 registered during the first quarter of the ongoing year.

 

Nomu was launched as an alternative equity market to Saudi Stock Exchange (Tadawul) mainly aimed at smaller cap companies although it provides the possibility for companies to transition to the main market after a period of time. 

 

The launch of Nomu was marked by the successful listing of 7 IPOs, according to PwC Middle East, a key provider of industry-focused services. 

 

On the primary exchange front, the first and largest regional offering in Q1 was by the Investment Holding Group (IHG), which operates various contracting businesses. 

 

The company listed on the Qatar Stock Exchange (QSE) and offered 49.8 million shares, raising proceeds of $138 million. IHG is the first Qatari IPO on QSE since 2014. 

 

The second offering was by Al Jazira Mawten REIT fund on Tadawul offering 11.8 million shares and raising $31 million. The fund invests in developing real estate to generate rental income. 

 

The third and final listing was by ENBD REIT fund on Nasdaq Dubai offering 94.6 million shares and raising proceeds of $ 105 million. The fund invests in a diversified portfolio of Shari'a-compliant real estate assets in the UAE. The IPO is the first to list on a Dubai exchange since March 2015.

 

In terms of IPO performance in Q1 compared to the same period the previous year, the number of offerings has significantly increased, with 10 IPOs in Q1 compared to just one last year; however the total proceeds raised in the first three months this year was 15 per cent lower compared to Q1 2016, said PwC Middle East. 

 

The low offering values in this quarter mainly relates to the nature and characteristics of the Numo market, one of which is a lower market capitalisation requirement compared to Tadawul, opening the doors for the listing of small to medium size enterprises, stated the firm in its report. 

 

Furthermore, the number and total proceeds raised from IPOs in Q1 2017 sharply increased compared to Q4 2016, which witnessed 1 IPO raising $37 million, it added. 

 

Saudi Arabia has been the most active market in terms of number of offerings and proceeds raised during the quarter, with a total of 8 IPOs (80 per cent) on Tadawul, out of which seven were listed on the Nomu Parallel Market with a total of $157 million raised, said a top expert. 

 

"An interesting start to the year, with the launch of Tadawul’s alternative equity market resulting in an influx of listings during the first three months of the year," remarked Steve Drake, PwC partner and head of capital markets and accounting advisory services team in the Middle East.

 

"As the region continues to adjust to a different oil price environment, we are starting to see signs of market recovery and activity which are positive indicators to what we hope to be an improved year for IPOs in the region. Furthermore, government initiatives across the region, including large scale privatisation activity is expected to boost capital markets activity in the next couple of years," he added.-TradeArabia News Service