Dubai – 30 October 2013: One Initial Public Offering (“IPO”) in the third quarter of 2013 (“Q3 2013”) in the Gulf Cooperation Council (“GCC”) attests to the equity markets familiar dry summer period in the region. The quarter started with the Holy month of Ramadan in July, followed by the Eid holidays in August and it is only in September that we began to see some activity. The Omani based Sembcorp Salalah Power & Water Company which offered 35% of its issued share capital amounting to USD 138 million (OMR 53 million), listed on the Muscat Stock Exchange. The only IPO in the GCC was oversubscribed and showed strong demand from both regional and international investors. This is the first quarter since 2011 where we did not see any listings on Tadawul, the Saudi Stock Exchange.
IPO performance in the same quarter of 2012 was similar with only one listing in the GCC. However, the offering size in Q3 2012 was 45% higher as compared to Q3 2013.
Steven Drake, Head of PwC’s Capital Markets Group in the Middle East region said:
“IPO performance during this quarter was not surprising as we typically expect to see slower activity during Ramadan and the summer period, albeit IPO performance is still low as compared to other global markets where we are seeing strong demand, particularly in the US. We know from the clients we are working with that there is increased appetite for equity offerings both within and outside the region. We would expect to see the return of a number of offerings in both the UAE and KSA. The apparent slowdown in the KSA market is to a large degree related to the length of time issuers’ are taking with the Capital Market Authority (CMA)review process, which is currently increasingly the lead time of companies coming to market.”
In Europe, 52 IPOs raised USD 4.1 billion in Q3 2013, over eight times the amount raised during the same period in 2012. A busy final quarter is expected, with the British Royal Mail’s debut in early October widely predicted to be the largest IPO in Europe this year. PwC is also seeing the return of companies who had postponed their IPOs in the past three years due to market conditions, with postponements in 2013 also falling to their lowest levels since the financial crisis.
Furthermore, private equity backed companies have continued to dominate IPO activity in the quarter, with two of the top five European IPOs raising close to USD 1.4 billion. Year to date, private equity backed transactions have raised approximately half of all European IPO proceeds and PwC expects private equity backed issuers to continue to drive activity in the near future.
London dominated the quarter with over half of total IPO proceeds raised or USD 2.3 billion, continuing the trend seen in Q1 and Q2 2013.
In the debt market, sovereign bonds were prevalent this quarter with issuances from Bahrain, Qatar, Kuwait, Oman and Saudi Arabia. One of the most prominent sovereign issuances was the 10 year USD 1.5 billion bond issued by Bahrain. There was also strong demand from investors for corporate issuances this quarter which was demonstrated by the successful issuance of USD 1 billion of bond by the Saudi Arabian based company, Saudi Basic Industries Corporation (“SABIC”). Another corporate issuance this quarter was the United Arab Emirates based Ruwais Power Company, which completed a USD 825 million bond issuance.
Sukuk also contributed to the debt market this quarter with encouraging market conditions and positive response to issuances such as a USD 500 million sukuk issued by the Abu Dhabi based Al Hilal Bank and the USD 453 million perpetual senior sukuk issued by the Saudi Arabian based Almarai Company.
Steve Drake said:
“Debt continues to be one of the main methods of raising public securities in the region as governments and companies continue to issue bonds and sukuk thanks to favourable market conditions and strong demand by investor. We see no reason for this trend declining given the continued demand for capital the region is experiencing.”
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 20 September 2013 and 30 September 2013 and captures the relevant data based on their transaction date. Capital Markets Watch GCC is prepared by PwC Middle East (www.pwc.com/middle-east). All market data is sourced from publically available information and has not been independently verified by PwC.
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 (www.pwc.com/uk) 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: http://www.pwc.co.uk/eng/publications/IPO_Watch_Europe_previous_editions.html
3. About the PwCs’ 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 PwC’s 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 PwC
PwC helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 184,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
Established in the Middle East for 40 years, PwC has firms in Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, the Palestinian territories, Qatar, Saudi Arabia and the United Arab Emirates, with around 2,700 people. (www.pwc.com/middle-east)
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.
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