Press release

Another weak year for IPOs in the GCC as issuers and investors remain wary of volatility in the Capital Markets

Initial public offerings (IPO) in the six nation Gulf Corporation Council (GCC) markets continued spiralling downwards in the fourth quarter of 2011 summing up a difficult year for IPOs on the regional exchanges. The three IPOs in Q4 2011 raised a total of USD 212m, with offering values falling marginally by 3% compared to the third quarter of 2011 but down significantly by 79% year on year, says PwC, a leading international professional services organisation.

Saudi Arabia continued to lead the GCC markets with two IPOs in the last quarter of 2011 contributing USD 148m or 70% of the total amount raised on the GCC exchanges. The only other IPO in the GCC during Q4 2011 was Oman’s SMN Power Holding which raised USD 63.8m. Although the number of IPOs in the last quarter of 2011 remained the same as Q4 2010, the average IPO size decreased significantly from USD 343m to USD 71m in Q4 2011.

Steve Drake, Head of PwC Capital Markets in the Middle East region, said:“Investor risk caution coupled with issuer reluctance to sell at perceived lower valuations contributed to a slow and stifled year in the equity markets. Issuers in the GCC deferred their IPO plans in 2011 as global economic instability such as the debt crisis seen in the Euro-zone and the regional political unrest impacted investor confidence. However, we are beginning to see issuer interest in some regional markets although the real test will come when we see the first IPO of 2012 and the level of interest shown by the investor community.”

In 2011, there were a total of nine IPOs in the GCC raising a total of USD 789m which was well below 2010 levels where 12 IPOs raised USD 2,031m, a 25% decrease in IPO volumes and a 61% decrease in value. Despite a reasonable start to 2011 with three IPOs in the first half of the year raising a total amount of USD 265m, the UAE exchanges remained largely subdued with no IPO activity during the second half of the year. Saudi Arabia hosted five IPOs on Tadawul during 2011 which contributed 58% of the total amount raised in the GCC. Saudi Arabia continues to be the most active IPO market in the region during recent times, however, the exchange underperformed considerably in 2011 as IPO volumes fell 44% whereas total money raised decreased by 55% compared to 2010. Oman’s last quarter issuance was the only other issuance outside the UAE and Saudi Arabia as all other GCC exchanges remained dormant during 2011.

Steve Drake added: “Regional IPO activity during the year has been difficult with both issuers and investors exhibiting caution as to when is the right time and condition to return to the market. As we are moving into 2012, we are seeing improvements in confidence on the supply side and so would expect to see increased activity in certain regional markets during 2012. We see a number of issuers beginning to prepare themselves for an IPO so that when the time is right, they are ready to act quickly. ”

In Europe, the market for company floats has suffered a difficult fourth quarter, rounding off a tough year for IPOs across the European region. In Q4 2011, 78 IPOs raised just USD 1.12bn, an 81% decrease in offering values compared to Q3 2011 and 83% down year on year, PwC’s latest IPO Watch Europe report has found.

London dominated activity in a muted quarter, raising USD 1.04bn, 92% of total European IPO value, with the London IPO of Polymetal raising USD 545.1m, 49% of all value raised in Europe. Q4 2011 has seen companies undecided on IPO timing because of the troubled market conditions and whilst companies are still looking to raise money, volatility and consensus about valuation continue to destabilise an already fragile market and unsettle potential investors.

Despite a subdued second half of 2011, annual European IPOs raised USD 34.3bn, in line with 2010. Volumes increased by 13% to 430 IPOs. London generated USD 18.9bn, more than half of the money raised, despite only hosting a quarter of the IPO deals across Europe. The top 15 deals raised USD 25.9bn, 75% of total IPO value across Europe in 2011, with the IPOs of Glencore, Vallares and Justice in London and Bankia and Banca Civica Dia in Spain raising USD 18.9bn in their own right.

Hong Kong saw a 43% decline in money raised, despite having attracted the IPOs of a number of international luxury brand companies during the year, such as Prada. In the US, the return of a number of larger deals in the first half of 2011 saw IPO’s raise USD 33.1bn in 2011, only a 13.4% decrease on 2010, which was buoyed by the jumbo IPO of General Motors.

GCC equity market indices ended 2011 in the red, as the Arab Spring and the European debt crisis washed away the impetus gained towards the end of 2010. The markets continued trending downwards over the course of the year as activity remained sluggish and liquidity dried up due to tightening of bank credit and the political unrest weighed down on institutional investors’ confidence in the perceived riskier equity assets. The Bahrain stock exchange was at the bottom of the league table shedding 20% at the end of 2011 followed by Dubai which decreased by 17%.

There are several initiatives in the pipeline which if they materialise are expected to positively impact and spur growth on the regional stock exchanges during 2012. Most notably, the establishment of a secondary IPO market in Qatar would create a new platform for small and medium sized entities to go public and raise funds in a less stringent regulatory environment. Furthermore, the Saudi market is likely to open up its markets to foreign ownership, making the Kingdom more attractive to international investors.

The creation of a single onshore exchange in the UAE thus by merging the Abu Dhabi Stock Exchange and Dubai Financial Market would also be expected to boost liquidity in the UAE market with a reduction of marginal costs of operating although there has been no progress in the merger talks recently.

The GCC bond and sukuk markets continued to grow during 2011 with a number of sizeable transactions. The bond market remained active throughout 2011 albeit finishing behind the previous year as some significant issuances were postponed or shelved due to regional political unrest, volatility of the financial markets and the Euro-zone debt crisis.

In Q4 2011, the State of Qatar issued three tranches of a USD 5bn sovereign bond, whilst the UAE’s IPIC quasi-sovereign bond was another prominent issuance in Q4 2011. The London Stock Exchange hosted the maximum number of GCC bond issuances as demand remained strong from the hydro-carbon rich GCC countries as was evident by consistent over-subscriptions.

During 2011, corporate bond issuances made up only 21% of the total funds raised through conventional bonds in the GCC as preference for Shariah-compliant and comparatively lower-cost gained traction in the region. Performance of corporate issuances on a stand-alone basis was mixed during the year as the political unrest in the GCC had a negative impact, especially during the March-April period. The majority of corporate issuances were in financial services, oil and gas and the power and real estate sectors to fund expansion plans and restructure balance sheets. The largest corporate issuances in Q4 2011 included Abu Dhabi National Energy Company’s (Taqa) USD 1.5bn bond. During the same period, Union National Bank issued a USD 400m corporate bond with other notable corporate bond issuances including the UAE’s Aabar Investments and Emirates Airline raising funds of USD 1.8bn and USD 1bn, respectively.

In contrast to the wavering bond market performance in 2011, the GCC sukuk market continues to recover after reaching its lowest ebb in the aftermath to the financial crisis. In 2011, GCC issuances collectively gained a larger share of the global sukuk market drawing investor demand from the Middle East as well as from Asia and Europe. The last quarter of 2011 witnessed corporate sukuk issuances outnumbering sovereign issues in the GCC largely driven by the strong demand in the financial services sector in the UAE and petrochemical and oil and gas sectors in Saudi Arabia. In Q4, Saudi Arabian Aramco Total Services Company issued one of the largest corporate sukuk of the year amounting to USD1bn.  In the same period, Abu Dhabi Islamic Bank and Abu Dhabi Commercial Bank (ADCB Islamic Finance (Cayman) Limited) both issued corporate sukuk in the amount of USD 500m.

Steve Drake said:“We see sukuk continuing to be a popular mode of financing in the GCC during 2012 so as to meet the refinancing needs of both the private as well as the public sector. In periods of uncertainty, fixed income products will continue to be attractive to investors seeking a steady yield. We would expect to see 2012 continuing to be strong particularly the more active markets of Saudi Arabia, the UAE and Qatar”.  

- Ends -

Notes to editors:

1. About Capital Markets Watch GCC

Capital Markets Watch GCC surveys conventional bond and Islamic issuance and new primary market equity IPOs on GCC’s principal stock markets and market segments (including exchanges in Kingdom of Saudi Arabia, Kingdom of Bahrain, Kuwait, Sultanate of Oman, Qatar and the United Arab Emirates) on a quarterly basis. This survey was conducted between 27 December 2011 and 20 January 2012 and captures the relevant data based on their transaction date. Capital Markets Watch GCC is prepared by PricewaterhouseCoopers Middle East ( All market data is sourced from publically available information and has not been independently verified by PricewaterhouseCoopers.

2. About IPO Watch Europe

IPO Watch Europe surveys all new primary market equity IPOs on Europe’s principal stock markets and market segments (including exchanges in Austria, Belgium, Denmark, France, Germany, Greece, Holland, Ireland, Italy, Luxembourg, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the UK) on a quarterly basis. Movements between markets on the same exchange and greenshoe offerings are excluded. IPO Watch Europe is prepared by PricewaterhouseCoopers LLP ( a limited liability partnership incorporated in England. PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers International Limited.  All market data is sourced from the stock markets themselves and has not been independently verified by PricewaterhouseCoopers LLP.

IPO Watch Europe Surveys and annual reviews are available at:

3. About the PricewaterhouseCoopers’ Capital Markets and Accounting Advisory Services Team in the Middle East

The Capital Markets and Accounting Advisory Services Team in the Middle East is part of the PricewaterhouseCoopers global network of capital markets specialists who provide a broad range of advisory services to companies and investment banks in connection with capital market transactions. These include preparations for becoming a public company, selecting the right market and advisory team, assisting with reviewing accounting policies and GAAP conversion projects, advising on regulatory issues and undertaking financial and business due diligence investigations.

4. About PricewaterhouseCoopers

PricewaterhouseCoopers ( provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. Close to 169,000 people in 158 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

Established in the region for over 30 years, PricewaterhouseCoopers Middle East has offices in 12 countries: Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Palestine, Qatar, Saudi Arabia and the United Arab Emirates, with around 2,500 people.

Unless otherwise indicated, '"PricewaterhouseCoopers" and "PwC" refer to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL). Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it control the exercise of another member firm's professional judgment or bind another member firm or PwCIL in any way.