Depressed initial public
offering (IPO) activity in the Gulf Cooperation Council (GCC) continued into
the second quarter (Q2) of 2013 with three new listings raising a total of only
$ 48 million. This compared to two IPOs in Q1, 2013 raising an aggregate of $
337 million, representing an 86 percent decrease in total value raised.
The average offering value dropped 94
percent this quarter compared to the same quarter last year where four IPOs
were witnessed raising a total of $ 1.1 billion. The total value raised in Q2,
2012 was the result of a stronger performance in the Saudi market, where out of
the total four IPOs, three were Saudi-based. While the value of offerings
significantly dropped this quarter, the number of offerings remained relatively
stable at 3 IPOs.
The Muscat Securities Market (MSM)
witnessed its first listing of the year with the $ 6 million IPO of Sharqiyah
Desalination Company which, with a small offering in value terms, received a
strong response in the aftermarket. The other IPOs in Q2, 2013 comprised two
Saudi-based insurance companies namely Aljazira Takaful Taawuni Company and
AIG-ANB Cooperative Insurance Company, both listed on the Tadawul with offering
values of $ 28 million and $ 14 million, respectively.
The most prominent share offering
during the quarter was that of the Abu Dhabi-based Al Noor Hospitals Group,
which listed 33 percent of its equity on the premium segment of the London
Stock Exchange (LSE), raising total proceeds of $ 342 million. Al Noor is the
second health care service provider in Abu Dhabi to have opted for an
international listing after NMC Health Plc, which raised $ 187 million in an
IPO on the LSE in 2012.
Steve Drake, head of PwC’s Capital
Markets business in the Middle East region, said: "Concerns looming over
the economic slowdown in certain global markets and the elevated political
instability in Egypt and other Countries in the Middle East would appear to
have dampened investor appetite and contributed to the low offering values we
have seen this quarter. Until volatility in global equity markets and the
political situation stabilizes, regional equity markets are likely to remain
subdued. However, we continue to see interest in companies looking to list
within the next 12 to 18 months."
In contrast, Europe’s IPO markets
have continued to gain momentum in Q2, building on the successful start to the
year, with $ 6.8 billion being raised, a 58 percent increase on the $ 4.3
billion raised in the first quarter of 2013. Over 81 percent of proceeds raised
in Q2 was generated from the top 10 deals.
Of note is the IPO of bpost, Belgium’s
national postal service on Euronext and Platform Acquisition Holdings, the
first major special purpose acquisition company to IPO in London since Vallares
in Q2 2011.
The post IPO performance of the
PE-backed IPOs in 2013 has been encouraging, particularly in London where they
have achieved significant gains on the IPO price since listing and have also
outperformed the FTSE index over the period since IPO. Elsewhere in Europe,
with the exception of Moleskine and Evonik, which are trading below their
respective IPO prices, the majority of PE-backed IPOs have held their IPO price
since listing and remain generally in line with the market.
The GCC bond market, similar to the
previous quarter, saw significant issuances from the Kuwait central bank, which
raised a total of $ 6.7 billion from issuances of its treasury bills and
long-term government bonds.
The banking sector continued to
dominate the corporate bond market with noteworthy issuances by both the UAE-
and Qatar-based banks. These included Emirates NBD’s $ 1 billion Tier one
capital issue, another $ 1 billion issue by Qatar National Bank under its Euro
Medium Term Note (EMTN) program and issuances by National Bank of Abu Dhabi and
Commercial Bank of Dubai, which raised $ 465 million and $ 500 million each
respectively.
After a quiet first quarter, the
Saudi sukuk market was seen to be one of the most active in Q2, 2013 with
sizable sukuk issuances on both the corporate and sovereign front. These
included sukuk issued by Islamic Development Bank raising total proceeds of $ 1
billion, Saudi Electricity Company and Sadara Chemicals Company each raising $
2 billion.
Another notable issuance during the
quarter is Dana Gas PJSC’s sukuk, which raised $ 850 million and which was
issued to refinance its existing debt.
Drake said: "The start of the
quarter proved stronger for debt issuances where we saw most of the money being
raised. However, toward the end of the quarter, market sentiment declined as
the interest rate environment hardened causing some issuers to postpone their
issuances.
(Arab News / 10 July 2013)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com
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