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IPO activity slows down in the GCC


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Muscat: Depressed Initial Public Offering (IPO) activity in the Gulf Cooperation Council (GCC) continued into the second quarter of 2013 as three new listings raised, in total, only $48 million. This compared to two IPOs in first quarter 2013 raising an aggregate of $337 million, representing an 86 per cent decrease in total value raised. The average offering value dropped 94 per cent this quarter, compared to the same quarter last year, which witnessed four IPOs raising a total of $1.1 billion.

The total value raised in second quarter 2012 was the result of a stronger performance in the Saudi market, where out of the four IPOs, three were Saudi-based. Whilst the value of offerings significantly dropped this quarter, the number of offerings remained relatively stable at three IPOs. Meanwhile, the Muscat Securities Market (MSM) witnessed its first listing of the year with a $6 million IPO of Sharqiyah Desalination Company which, whilst a small offering in value terms, received a strong response in the aftermarket. The other IPOs in second quarter 2013 included two Saudi-based insurance companies, Aljazira Takaful Taawuni Company and AIG-ANB Cooperative Insurance Company, both listed on the Tadawul with offering values of $28 million and $14 million, respectively.

The most prominent share offering during the quarter was that of the Abu Dhabi-based Al Noor Hospitals Group, which listed 33 per cent of its equity on the premium segment of the London Stock Exchange (LSE), raising total proceeds of $342 million. Al Noor is the second health care service provider in Abu Dhabi to have opted for an international listing after NMC Health, which raised $187 million in an IPO on the LSE in 2012.

Economic slowdown
Steve Drake, Head of PwC's Capital Markets business in the Middle East region, noted, "Concerns looming over the economic slowdown in certain global markets, and the elevated political instability in Egypt and other countries in the Middle East, would appear to have dampened investor appetites and contributed to the low offering values we have seen this quarter."

"Until volatility in global equity markets and the political situation stabilises, regional equity markets are likely to remain subdued. However, we continue to see interest in companies looking to list within the next 12 to 18 months," he added.

The GCC bond market, similar to the previous quarter, saw significant issuances from the Kuwait Central Bank, which raised a total of $6.7 billion from issuances of its treasury bills and long-term government bonds. Further, the banking sector continued to dominate the corporate bond market with noteworthy issuances by both UAE and Qatar-based banks. These included Emirates NBD's $1 billion Tier one capital issue, another $1 billion issue by Qatar National Bank under its Euro Medium Term Note programme and issuances by National Bank of Abu Dhabi and Commercial Bank of Dubai, which raised $465 million and $500 million each, respectively.

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