Soft start for GCC share offerings

Muscat: After a busy end to last year, 2019 started softly with just one IPO in the GCC for this quarter. Overall, Gulf markets performed steadily, with Tadawul continuing to lead the Gulf Cooperation Council (GCC) stock markets, followed closely by Boursa Kuwait.
Global activity was also muted, with initial public offering (IPO) proceeds more than halved compared to the same quarter in 2018. Meanwhile, efforts to attract investments into the Gulf continue, with the UAE Government set to confirm the sectors eligible for 100 per cent onshore foreign ownership. Continued privatisation efforts across Saudi Arabia, Oman and Kuwait is expected to drive activity.
Steve Drake, PwC Middle East Capital Markets Leader said: “Although 2018 closed on a promising note, 2019 started slowly with a single listing in the GCC by Al Moammar Information Systems, which raised US$58 million on Tadawul. This is compared to five listings in the last quarter of 2018, raising over USD1 billion, and four in first quarter of 2018 with proceeds totalling US$430 million. This sole IPO was, nonetheless, a milestone for the Kingdom as it was the first ever IT company to list on Tadawul.”
“Looking ahead, we expect some rebound in the level of GCC IPO activity compared to the levels seen in this quarter as a number of companies in the region have indicated their intention to list in the next 12 to 18 months. The region’s debt market continues to be active, with debt products proving to be of interest to investors," he added.
"In addition to the seasoned bond issuers, the quarter also witnessed a number of debut debt offering, namely Almarai’s US$500 million sukuk. With the significant oversubscription of Saudi Aramco’s first ever bond offering on April 9, we move into the second quarter of the year on an optimistic note,” he pointed out.
As the first IT company to ever list in Saudi’s Tadawul, and the only listing for the GCC this quarter, Al Moammar Information Systems’s retail offering was 149 per cent oversubscribed, raising US$58 million by issuing 4.8 million shares.
Sovereign bond issuances dominated GCC debt market activity this quarter, with notable multi-tranche issuances by the State of Qatar (US$12 billion) and the Kingdom of Saudi Arabia (US$7.5 billion).
The inclusion of GCC sovereign bonds to JP Morgan’s Emerging Market Bond Index (EMBI) from January 2019 is expected to further boost the demand for GCC sovereign bonds, as evidenced by the over-subscription of the recent KSA and Qatar bond issuances.
Corporate debt activity was also very active with a number of issuances this quarter stemming from banking institutions, including a Tier 1 sukuk by Dubai Islamic Bank PJSC and programme drawdowns by Qatar International Islamic Bank, Mashreqbank PSC and First Abu Dhabi Bank PJSC.