(MENAFN- Khaleej Times) GCC IPO activity declined in the second quarter of 2017 due to market volatility but debt issuances remained popular as GCC governments and the private sector raised $11.5 billion through bonds and sukuks, says a new report.
The number of offerings slightly increased with three IPOs in the second quarter of 2017 compared to two IPOs the same period last year. However, the total proceeds raised was 38 per cent lower.
During the three-month period, three companies raised $171 million compared to two raising $274 million in the same period last year.
All the three IPOs were launched at Saudi markets - the Tadawul and the parallel market Nomu.
Jadwa Reit Alharamin Fund, which floated a total of 36 million shares, raised $96 million to invest in income-generating real estate assets in Saudi Arabia, with a principal focus on the holy cities of Makkah and Madinah.
On the parallel market front, the first and largest offering in the second quarter was by Thob Al-Aseel, which floated three million shares, raising $68 million. The third offering was by Al Kathiri Holding, which floated 0.8 million shares raising $6.7 million.
"During Q2 2017, Saudi Arabia continued to be the main driver of IPO market activity in the GCC, while the Nomu parallel market for small and medium-sized enterprises in the kingdom remained popular among investors," said Steve Drake, head of PwC's capital markets and accounting advisory services team in the Middle East.
Furthermore, IPO activity in the first half of 2017 witnessed an increase in the number of offerings (13) compared to only three in the same period last year, which was largely due to the increased activity in the first quarter of 2017. However, proceeds raised were 23 per cent lower compared to the first half last year. The appetite for debt issuance in the GCC surged throughout the second quarter. Sovereign issuance by GCC governments remained the main theme, whilst the quarter saw Saudi Arabia issuing its first US dollar denominated sukuk, raising $9 billion.
Corporate bond issuance remained very active across the region while sovereign bond issuance activity slowed down in the second quarter. In the UAE, Industrial & Commercial Bank of China Limited - Dubai Branch listed three bonds on Nasdaq Dubai, amounting to $400 million, $300 million and ?500 million.
wIn Saudi Arabia, Acwa Power Management and Investments issued bonds amounting to $814 million. In Kuwait, National Bank of Kuwait issued non-guaranteed bonds of $750 million as part of its medium-term bonds issue programme. For sukuk, the Saudi government was the biggest contributor in the region, issuing a $9 billion Islamic sukuk, followed by Oman's $2 billion issuance.
On the corporate front, Dar Al-ArkanSukuk Company issued a $500 million sukuk which received significant interest from international market participants with the order book close to $1.05 billion, equal to two times of the amount issued.
"Debt issuance in the GCC countries remained popular throughout Q2 2017 as GCC governments' sovereign issuance were oversubscribed domestically and internationally. 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," said Drake.
-
MENAFN2608201700490000ID1095774322
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.