Press release

Two IPOs in the GCC this quarter from Qatar and Saudi Arabia, with anticipation of improved offering volumes for year 2014

Dubai – 6 May 2014: Initial Public Offerings (“IPO”) in the Gulf Cooperation Council countries (“GCC”) in the first quarter (“Q1”) 2014 showed improvements in terms of offering value compared to Q1 2013, albeit IPO volumes remained relatively stable at two offerings. Total proceeds raised were higher by 183% than in Q1 2013.

The Qatar Exchange saw its first IPO since 2010 with the listing of Mesaieed Petrochemical Holding Company (“MPHC”) raising USD 881 million. The MPHC offering received a strong response from investors being five times oversubscribed. It is hoped that the MPHC listing will act as a catalyst for other companies considering to float on the Qatar Exchange. Saudi Marketing Company was the second IPO in the quarter, raising USD 72 million on the Tadawul Stock Exchange.

Continuing the trend of cross border offerings by regional companies listing on the London Stock Exchange (“LSE”), Gulf Marine Services, a United Arab Emirates based private equity backed company, listed on the Premium Market of the LSE in March raising USD 296 million.

Steve Drake, Head of PwC’s Capital Markets in the Middle East region said:

“Although we have seen an increase in values in Q1 2014, we are still not seeing significant IPO activity on our regional markets. In Saudi Arabia there is a strong pipeline for example but companies are taking time getting through the CMA review process. In the UAE we see some appetite but a lot of that appetite is for cross border offerings rather than local exchange offerings.”

The European IPO market is enjoying buoyant conditions driven by rising market confidence and suppressed demand for new shares as investors seem relieved that the Eurozone crisis has dwindled. Both in terms of number of transactions and money raised European IPO activity for Q1 2014 (USD 16.1 billion from 42 IPOs) strongly outperformed Q1 2013 (USD 5.7 billion from 18 IPOs). Nine of the quarter’s twenty largest IPOs around the globe were executed in Europe. Although the IPO activity was spread across the continent, the LSE remained the leading European exchange with five out of the top ten

European IPOs listing in London.

Overall, the UK IPO market saw 26 IPOs of the total 42 IPOs in the period raising a combined total of USD 8.5 billion. The two largest European IPOs of the past quarter were international telecommunications group Altice (raising USD 2.0 billion on NYSE Euronext Amsterdam) and Danish outsourcing company ISS (raising USD 1.8 billion on NASDAQ OMX Copenhagen). The Spanish IPO market has also experienced an uptick with the flotations of real estate companies and REITs such as Hispania Activos Immobiliaros and Lar Espana Real Estate Socimi, raising USD 763 million and USD 547 million respectively. Similar to the situation in the US, PE-backed IPOs made a robust contribution to European IPO activity in the first quarter of 2014, accounting for 36% of the total number of deals and 46% of the total amount of money raised.

Turning to the public debt markets, during Q1 2014, Kuwait Projects Company (“KIPCO”) issued a USD 500 million bond which received a positive response from investors and was six times oversubscribed.  In the United Arab Emirates this quarter, ADCB Finance Cayman Limited issued a USD 750 million bond in March. Furthermore, the Central Bank of Kuwait issued five government bonds this quarter each amounting to approximately USD 177 million and maturing in one year.

The GCC sukuk market was dominated by corporate issuances from Saudi Arabian based companies and sovereign issuances from the Qatar government. The Saudi Arabian National Commercial Bank issued a USD 1.333 billion sukuk in February making it the country’s largest issuance by a financial institution. Also in the Kingdom, Islamic Development Bank and Saudi Electricity Company issued a USD 1.500 billion and USD 1.200 billion sukuk, respectively.  On the sovereign front, Qatar Central Bank was a key player issuing two sukuk in January in the amount of USD 1.921 billion and USD 1.098 billion

Steve Drake said: “Public debt issuances continued to be strong in Q1 2014. The challenge we will see going forward is whether issuances will be sustained at similar levels given the apparent availability of conventional bank debt in the regional markets."

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 20 March 2014 and 31 March 2014 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 over 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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