A subdued quarter as multiple companies prepare for their IPOs
$93mn raised from the only IPO in Q3 2019 across the GCC, compared to $484mn in Q3 2018
The GCC equity market continued to be quiet during Q3 2019, with only one company listing on the Kingdom of Saudi Arabia’s Tadawul as compared with three in the same quarter last year across a range of sectors. However, the region’s debt market was active and witnessed iconic transactions during the quarter.
Even though all IPO activities in the region have been limited to Saudi Arabia in 2019, we are expecting the UAE market to pick up pace as multiple companies have announced their intent to go public and initiated the groundwork for a successful IPO.
A notable quarter for the GCC market with high value sovereign bond and sukuk issuances
Also during this quarter, Dubai became one of the largest global centres for sukuk listings by value when global port operator, DP World, listed sukuk worth USD 1.5bn and bonds worth USD 800m on Nasdaq, Dubai. West of Dubai, Abu Dhabi’s positive credit rating and competitive return attracted significant interest from investors’ as the first sovereign bond in two years issued by the Emirate raised USD 10bn. And finally, Saudi also issued its first Euro denominated bond worth EUR 3bn.
Steve Drake, PwC Middle East Capital Markets Partner, said: “Proceeds of USD 93m were generated from the sole IPO, Ataa Educational Co., consumer services sector, representing a decline of USD 391m from Q3 2018 when USD 484m was raised. We anticipate the coming quarter to be significantly more active with the recent announcement of Saudi Aramco's record breaking flotation on Tadwaul, along with many other companies which have expressed their intention to list in 2019.”
He added: “Meanwhile Tadawul’s recent announcement that it will soon allow listing of foreign companies on its exchange offers further optimism and will further promote equity activity in the region.”
Boursa Kuwait continued to outperform other GCC exchanges by cumulative total return, whilst Tadawul retreated to the fifth position in Q3 2019.
All regions recorded a reduction in IPO activity in terms of both proceeds and volume compared to Q3 2018. Globally, 226 IPOs raised USD 40.4bn compared to 279 IPOs with proceeds of USD 51.6bn in Q3 2018 – a reduction of 19% in volume and 22% in proceeds.
The Americas came second, contributing to 38% of global proceeds and 23% in volume and Asia Pacific is the IPO leader in this quarter, accounting for 51% (USD 20.6bn) of proceeds and 68% (153) of the number of IPOs.
Steve Drake ended: “Q3 2019 was quieter than expected for equity capital markets. Volatility was high against a backdrop of geopolitical tensions, slower economic performance overall and doubts regarding central bank action. Despite this, it's been an eventful quarter for the UAE debt market, and a notable quarter for the GCC with high value sovereign bond and sukuk issuances. This will continue to revitalise the GCC market activity in the near future.”