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As some countries are seeing the benefits of mass COVID-19 vaccination drives and starting to plan for their gradual exits from lockdowns, some degree of investor confidence is returning as reflected through the 5 IPOs in Q1 2021.
2020 and Q1 2021 saw a flurry of debt activity including multiple sovereign issuances encouraged by the low interest rates and weak oil prices. With oil prices gradually recovering, we may see an adjustment to the sovereign debt activity in the near term.
raised from IPOs in Q1 2021 across the GCC compared to USD 734m in Q1 2020
across 4 countries in Q1 2021 compared to 3 across 2 countries in Q1 2020
sukuk issued by IDB Trust Services Limited in Q1 2021 on Nasdaq Dubai
bond issued by the Emirate of Sharjah in Q1 2021 on Nasdaq Dubai
2020 was a quiet year with only 7 IPOs, of which three occurred during Q1 2020, before the impact of COVID-19 escalated. In contrast, Q1 2021 alone witnessed a total of 5 IPOs raising USD 571 million. Two of these IPOs were listed on Tadawul and contributed to 49% of the total GCC proceeds for the quarter: Alkhorayef Water and Power Technologies Co. and Theeb Rent a Car Co raised USD 138 million and USD 144 million, respectively.
UAE’s first IPO in three years debuted on the Dubai Financial Market (DFM). Al Mal Capital REIT raised USD 95 million and was also the exchange’s first real estate investment fund listing. UAE launched multiple initiatives during the year relating to business ownership and listing requirements which are expected to have a positive impact on IPOs on the local stock exchanges which include, amongst others:
Muscat Securities Market also played host to a REIT IPO this quarter, which raised USD 13.1 million for Oman REIT Fund.
This quarter's largest IPO took place on the Qatar Stock Exchange (“QSE”): Q Life & Medical Insurance Co LLC raised USD 181 million. QSE is also set to launch the QE Venture Market aimed at SMEs that do not fulfil the listing requirement of the main market to give them an alternative fundraising option.
The listing of UAE-based Al Mal Capital REIT in January on the Dubai Financial Market (“DFM”) was an important milestone. Not only did it mark the first primary listing in Dubai in nearly three years but it was also the first ever real estate investment fund to be listed on the SCA-regulated DFM. The IPO raised AED 350 million (USD 95 million) and the company disclosed that the proceeds would be invested in a Shariah-compliant diversified portfolio of income generating properties that serve sectors including healthcare, education and industrial assets, with a target annual return of 7%.
PwC played a pivotal role in delivering this milestone IPO. We acted as the Company's reporting auditor and worked closely with management in undertaking tasks required of a reporting auditor in the IPO of a real estate fund under the regulations issued by SCA.
Essa Kazim, chairman of the DFM, commented during Al Mal Capital REIT’s bell ringing ceremony at the exchange that “today’s listing is a key foundation for this new asset class and we are looking forward to see it gaining momentum during the coming period in line with REIT’s strong presence globally and to truly reflect the magnitude, quality and expansion of the real estate sector in Dubai by encouraging the establishment and listing of more REITs in the future."
The region’s debt market continued to be in the limelight this quarter with its high value issuances. Nasdaq Dubai has attracted a number of ESG debt issuances in the last two years including multiple green and sustainability sukuks and bonds. During the quarter, it welcomed the listing of Islamic Development Bank’s second sustainability sukuk. The USD 2.5 billion proceeds will be used to support green and social development projects that comply with Islamic Development Bank’s sustainable finance framework.
Nasdaq Dubai also hosted multiple corporate and sovereign bonds during the quarter including the USD 1.25 billion bond by DAE Funding LLC, the USD 750 million bond by Emirates NBD PJSC and the USD 1.25 billion bond by the Government of the Emirate of Sharjah.
Several other governments in the region also issued debt in order to add liquidity to their respective economies. The Kingdom of Saudi Arabia issued several sovereign sukuks amounting to USD 3.67 billion; the Kingdom of Bahrain issued USD 780 million worth of bonds; and the Sultanate of Oman issued a bond worth USD 263 million.
GCC equity markets performance by cumulative total return since 1 January 2020
Source: Eikon (Thomson Reuter), PwC Analysis
Share price performance of 2019, 2020 and 2021 GCC IPOs* by sector, relative to the respective all share index, from the IPO date to 31st March 2021
Source: Eikon (Thomson Reuter), PwC Analysis
The percentage figures shown in the chart above are the average share price movements of the newly listed companies under each sector relative to the index performance of the respective exchange.
* The IPOs of Al Moammar Information System Company and Sprinkle Holding BSC have been excluded due to insufficient data.
** The increase is mainly contributed by an increase of 1021% in the share price of Boursa Kuwait Securities Company (K.P.S.C.). If Boursa Kuwait Securities Company (K.P.S.C.) is excluded, the increase would be 38%
There were 727 IPOs globally in Q1 2021, raising a total of USD 202.9 billion. Q1 2021 alone has raised more than 60% of the entire 2020 proceeds and more than 50% of the total number of IPOs that have taken place in 2020. The global economic recovery evident in Q1 2021 performance suggests investors could be regaining confidence from the optimism which COVID-19 vaccines are bringing.
Despite market volatility remaining elevated in Q1 2021, the abundance of liquidity brought about by global COVID-19 relief stimulus packages evidently has kept IPO and Further Offerings (“FO”) active globally.
The financial and health care sectors contributed prominently to the total FO issuances in Q1 2021. There were 1,285 FOs, which is significantly higher than the same quarter in 2019 and more than double that of Q1 2020, raising proceeds of USD 247.9 billion.
Similar to previous quarters, the Americas still led the global IPO market in terms of proceeds and the number of listings. The total proceeds of the Americas, USD 143.9 billion, made up 71% of the global proceeds. The USD 2.5 billion Bumble IPO on Nasdaq was the largest in the region.
Despite the decline in IPO activity in the Asia- pacific region from Q4 2020 to Q1 2021, the region still produced the two biggest IPOs in the world for the quarter. The Kuaishou IPO on the Hong Kong Stock raised USD 6.2 billion in proceeds in January 2021. The company saw a remarkable 160% jump in share price on its first day of trading. The Asia-pacific region raised more than USD 10 billion.
It has been a strong start to the year for IPOs in Europe, with Q1 2021 delivering the strongest first quarter since 2000. Polish e-commerce delivery service InPost delivered the largest EMEA IPO for the quarter, raising USD 3.9 billion on the Euronext Amsterdam Stock Exchange.
Q1 2021 has started with great momentum that is expected to carry on throughout the rest of the year so long as the early signs of improvement in the COVID-19 situation continues. In the upcoming quarter there is an expectation to see a better representation of sectors in the IPO pipeline, including recovery themed sectors such as Consumer Discretionary in addition to Technology that has fared well during the pandemic.
Our IPO and debt Readiness Assessment is an early stage diagnostic review of the critical areas needed for a successful issuance. We highlight where current processes, procedures, structures and practices fall short of the requirements for a company whose securities are to be publicly traded and provide recommendations on how to address these gaps. In the current environment, it is equally important to address the risks associated with COVID-19. which will have an accounting and financial reporting implication in most companies, including amongst others, impairment of assets, changes to lease terms and government support. Our assessment can be tailored to include these aspects as well as some broader areas such as business continuity and contingency planning.
We work with issuers and their advisors to provide IPO and debt advisory and assurance services. This may include working capital reporting, financial due diligence, financial positions and prospects procedures assessment, assistance with MD&A drafting in relation to a prospectus, comfort letters and project management.
Assurance Leader, PwC Middle East
Tel: +971 4304 3100
Partner, Capital Markets, PwC Middle East
Tel: +971 4 3043443
Partner, Capital Markets, PwC Middle East
Tel: +971 56 417 6719