Monday 19 August 2019

Soft start for GCC IPOs but a strong pipeline
and positive outlook ahead

Soft start for GCC IPOs, but expect rebound, says expert

DUBAI, April 21, 2019

The level of IPO activity in the GCC is expected to rebound compared to the levels seen in the first quarter as a number of companies in the region have indicated their intention to list in the next 12 to 18 months, said an industry expert.

Steve Drake, PwC Middle East Capital Markets leader, was commenting on the report titled “GCC Capital Markets Watch for Q1 2019” from professional services firm PwC.

After a busy end to last year, 2019 started softly with just one IPO in the GCC for this quarter. Overall, Gulf markets performed steadily, with Tadawul continuing to lead the GCC stock markets, followed closely by Boursa Kuwait.

Global activity was also muted, with IPO proceeds more than halved compared to the same quarter in 2018. Meanwhile, efforts to attract investments into the Gulf continue, with the UAE Government set to confirm the sectors eligible for 100 percent onshore foreign ownership. Continued privatisation efforts across Saudi Arabia, Oman and Kuwait are expected to drive activity.

“Although 2018 closed on a promising note, 2019 started slowly with a single listing in the GCC by Al Moammar Information Systems, which raised $58 million on Tadawul. This is compared to five listings in the last quarter of 2018, raising over $1 billion, and four in Q1 2018 with proceeds totalling $430 million. This sole IPO was, nonetheless, a milestone for the Kingdom as it was the first ever IT company to list on Tadawul,” Drake said.

“The region’s debt market continues to be active, with debt products proving to be of interest to investors. In addition to the seasoned bond issuers, the quarter also witnessed a number of debut debt offering, namely Almarai’s $500 million sukuk. With the significant oversubscription of Saudi Aramco’s first ever bond offering on 9 April, we move into the second quarter of the year on an optimistic note,” he added.

Tadawul sees the GCC’s only IPO for Q1 2019

As the first IT company to ever list in Saudi’s Tadawul, and the only listing for the GCC this quarter, Al Moammar Information Systems’s retail offering was 149 per cent oversubscribed, raising $58 million by issuing 4.8 million shares.

High demand for GCC sovereign bonds

Sovereign bond issuances dominated GCC debt market activity this quarter, with notable multi-tranche issuances by the State of Qatar ($12 billion) and the Kingdom of Saudi Arabia ($7.5 billion).  

The inclusion of GCC sovereign bonds to JP Morgan’s Emerging Market Bond Index (EMBI) from January 2019 is expected to further boost the demand for GCC sovereign bonds, as evidenced by the over-subscription of the recent KSA and Qatar bond issuances.

Corporate debt activity was also very active with a number of issuances this quarter stemming from banking institutions, including a Tier 1 sukuk by Dubai Islamic Bank PJSC and programme drawdowns by Qatar International Islamic Bank, Mashreqbank PSC and First Abu Dhabi Bank PJSC.

“We expect a significant spike in GCC debt activity with the debut issuance by Saudi Aramco in Q2,” Drake added. – TradeArabia News Service


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