1H 2018 witnesses a high number of REIT IPOs in KSA; amidst cautious optimism in other GCC markets: PwC

Globally, the IPO offering value has increased by 7% despite a 25% reduction in the number of IPOs, compared to the same quarter last year.

USD 23 billion of funds raised by the top two sovereign issuers in Q2 2018.

The recent approval of Tadawul’s inclusion in the MSCI Emerging Markets Index will be completed in June 2019 and is expected to attract foreign investment. 
 
Dubai: Investors continued to tread cautiously in the GCC equity markets in Q2 2018. Tadawul saw 8 REIT listings in H1 2018, together with a USD 13 million listing of an insurance company in Oman generated total proceeds of USD 893 million across GCC in H1 2018, compared to USD 610 million raised from 15 IPOs in H1 2017. The increase in proceeds is mainly due to the two REIT IPOs - Sedco Capital REIT (USD 173 million) and Bonyan REIT (USD 174 million).

In terms of stock market performance, Tadawul remained the best performing stock exchange with Tadawul All Share Index (TASI) recording a 12% improvement compared to the same period in 2017, followed closely by Abu Dhabi Securities Exchange (ADX), contrasting with the flat volumes and negative returns experienced by Dubai Financial Market (DFM) and Muscat Securities Market (MSM) in H1 2018. The recent approval of Tadawul’s inclusion in the MSCI Emerging Markets index which is to be completed in June 2019, is expected to attract foreign investment and provide a positive boost to the Tadwaul equity market.

The future trajectory of GCC equity markets will continue to depend on geopolitical developments, stability of oil prices and the implementation of ongoing government reform policies and related privatisation initiatives across the GCC region.

Steve Drake, Head of PwC’s Capital Markets and Accounting Advisory Services team in the Middle East said: “The uncertainties in the macroeconomics of the region mean that the IPO window is narrower than it has been in the past. It is more important than ever for companies interested in capital markets funding to get ready early to capture the opportunity when it arrives.”
                                         

Global IPOs
Despite the challenging market conditions and the resultant reduction in deals volume by 25%, global IPO proceeds were up by 7%. In total, 300 IPOs raised USD 58.1 billion in Q2 2018 (2017: 398 and USD 54.1 billion; 2016: 253 and USD 35.2 billion).

Although the global IPO pipeline for 2018 looks promising, with global headwinds increasing, market volatility levels could further increase and the pipeline could fail to materialise.

GCC bond and sukuk issuances
Led by the State of Qatar and the Kingdom of Saudi Arabia, the GCC sovereign bond market witnessed proceeds of USD 22.9 billion during the second Quarter of 2018 from its two largest sovereign bond issuers. The USD 12.0 billion sovereign bond issued by Qatar represents the largest placement by an emerging market sovereign so far this year. Corporate debt activity, however, has been relatively slow.
 
Given the recent recovery in oil prices and easing of government fiscal deficits, sovereign debt issuances are expected to taper in the latter half of 2018.

For the full report click here: https://www.pwc.com/m1/en/publications/capital-markets-watch.html  

-Ends-

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com. 
 
Established in the Middle East for 40 years, PwC has 23 offices across 12 countries in the region with around 4,200 people. (www.pwc.com/me).  

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

© Press Release 2018