Value of Gulf's IPOs climbs 87% in second quarter

Aramco’s mega-bond issue puts spotlight on the value of the region’s debt market

Saudi Arabia's Tadawul stock exchange saw two listings in the second quarter boosting IPO activity in the region. Bloomberg

The value of capital raised on equity markets in the Arabian Gulf rose 87 per cent year-on-year in the second quarter, even as the number of listings fell, according to a new report from PwC.

Two initial public offerings (IPOs) took place in the region over the three-month period - Arabian Centres Company and Maharan Human Resources Company, which were both on Saudi Arabia's Tadawul market. However, this was a decline on the five listings that took place in the same quarter last year. The amount of money raised, however, jumped to $866 million, compared to $463m in the prior year.

"Geopolitical uncertainty will continue to impact the regional economy. Recent events in the Gulf of Oman and ongoing Brexit uncertainties, among other more recent developments, are cutting the IPO windows even shorter," said Steve Drake, capital markets partner at PwC Middle East.

“Companies looking to tap into the equity capital market should get themselves ready early and remain on standby, in order to maximise their chances of a successful IPO.”

The report also said GCC debt market activity was dominated by sukuk issuances this quarter, including sizeable issuances by the Emirate of Sharjah and Islamic Development Bank Trust Services Limited, raising $1 billion and $1.5bn respectively on Nasdaq Dubai.

Saudi Aramco’s bond issue was by and large the most prominent corporate transaction of the quarter, with the state-owned oil company raising $12bn.

Debt issuance activity is expected to continue in Saudi Arabia, where the government is expected to issue $31.5bn in sovereign debt this year to help fund government spending, the report said.

“The UAE Cabinet’s recent announcement of sectors and economic activities eligible for 100 per cent foreign ownership is also expected to revitalise market activity in the UAE in the near future. Meanwhile in Saudi Arabia, activity on Tadawul is likely to continue to improve since the exchange and Saudi’s Capital Market Authority latest regulations allowing for GCC-wide cross-listing,” said Mr Drake.

While there have been no equity listings on UAE exchanges during the second quarter , two major UAE companies – Network International and Finablr (owner of UAE Exchange and Travelex), successfully completed IPOs on the London Stock Exchange’s main market in April.

The Network International IPO represented the largest outbound IPO to date from the Middle East and Africa region on any international stock exchange.

The IPO opened at a significant premium, valuing the business at over $3bn and making it the biggest listing on the London Stock Exchange since June 2017.