GCC listing activity remains sluggish in Q2

Gulf Cooperation Council initial public offering activity remained limited in the second quarter with a slight increase in the number of listings but a decrease in the proceeds raised, according to PwC.

The professional services firm said market volatility weighted on investor sentiment with Saudi Arabia hosting the only three IPOs of the quarter allocated between its primary market the Tadawul and parallel market NOMU.

This compared to two listings across the region in Q2 of 2016 but the proceeds raised were 38 per cent lower year-on-year.

On the primary exchange Jadwa REIT Alharamin FUND floated 36 million shares and raised $96m.

Meanwhile, NOMU saw its first and largest offering from Thob Al-Aseel Co, which floated three million shares and raised $68m, and a second offering by Al Kathiri Holding Co, which floated 0.8 million shares and raised $6.7m.

It was a similar story in the second half of 2017 as a whole with 13 offerings compared to three in the same period of 2016 but a 23 per cent reduction in proceeds raised.

In comparison, global IPO activity increased by nearly 50 per cent in terms of both proceeds and number of listings in the second quarter compared to the same period in 2016.

A total of $52.6bn was raised through 379 IPOs across the world in the second quarter compared to $35.2bn via 253 in Q2 of 2016.

PwC said debt issuance activity remained strong across the GCC in the second quarter with Saudi’s first dollar denominated sukuk, which raised $9bn, and a $2bn issuance by Oman. Saudi developer Dar Al Arkan also issued a $500m sukuk with interest of close to $1.05bn.

Elsewhere, there were three bond issuances from Industrial & Commercial Bank of China on Nasdaq Dubai for $400m, $300m and EUR500m, $814m of bonds issued by ACWA Power in Saudi and $750m of non-guaranteed bonds from National Bank of Kuwait.

“Debt issuance in the GCC countries remained popular throughout Q2 2017 as GCC governments’ sovereign issuance were oversubscribed domestically and internationally,” said PwC’s head of capital markets and accounting advisory services for the Middle East Steve Drake.

“However, consecutive interest rate hikes by US Federal Reserve may hamper GCC government debt appetite, while a hawkish policy would trigger a surge in borrowing cost across the global and regional debt market.”