GCC IPOs go down in Q3 - report

Initial Public Offerings (IPOs) activity in GCC markets witnessed a drop in the third quarter of 2018, compared to the two previous quarters of this year.

The three-month period ended in September saw only three IPOs in the GCC across a wide range of sectors, according to a recent report released by PricewaterhouseCoopers (PWC).

The new offerings took place in Kuwait and Oman, in addition to a listing on the Saudi Stock Exchange (Tadawul), bringing total proceeds of these IPOs to $484 million, compared to $463 million in Q2-18, the multinational professional services network said.

Boursa Kuwait, one of the region’s oldest stock exchanges, welcomed its first IPO in more than ten years, after a thorough infrastructure restructuring and reconfiguration, raising $214 million, the report said.

As for equity markets, they remained quiet on the back of the economic slowdown and an increase in interest rates pushed by the US Federal Reserve's interest rate hikes over 2018.

“Overall, the Capital Markets activity in the region is progressing at a cautious pace. There are signs of recovery, but it remains to be seen whether they are enough to counter the escalating pressure from increasing geopolitical uncertainties and interest rate hikes,” Steve Drake, leader of PwC Middle East Capital Markets, said.

He added that the GCC equity markets were not dominated by REIT IPOs over the quarter, but they were exposed to healthy diversification in both sectors and geographies compared with the dominance of REITs and Saudi listings in Q1 and Q2.

Tadawul’s fresh issuance activity softened during Q3, compared to the same period of the prior year, as Leejam Sports Company was the only IPO on the Saudi bourse during Q3-18, compared to three listings in the same quarter a year earlier.

“Proceeds [from Tadawul’s third-quarter listings] were not however negatively impacted, with $218 million generated – a 7% increase compared to the $204 million raised from the three IPOs in the same period in 2017,” the report highlighted.

Proceeds generated from sovereign bonds tumbled to $3.9 billion in Q3-18, compared $22.8 billion in Q2-18.

On the other hand, corporate bond and sukuk proceeds jumped to $3.5 billion in Q3-18, versus $2 billion in the quarter before, predominantly attributable to DP World, which has completed its seventh debt listing on Nasdaq Dubai, raising $2.3 billion from corporate bond and $1.0 billion from sukuk issuance.