GCC IPO market 'remains sluggish'
Manama, November 21, 2011
The GCC initial public offering (IPO) market continues to remain sluggish with only two listings in the third quarter of the year compared to three in the second quarter, according to PwC, a leading international professional services organisation.
Both the IPOs in the second quarter were in Saudi Arabia, raising $219 million, with Hail Cement Company raising $131m and United Wire Factories Company $88m, said PwC.
'IPO activity in the third quarter has followed similarly flat levels as seen in the second quarter,' said PwC head of capital markets Steve Drake.
'This is to be expected over the summer months and through Ramadan, with any IPO we are likely to see being in the final quarter or more likely into 2012,' he noted.
'Of the regional markets, we continue to see Saudi Arabia being the strongest IPO market and expect to see continued IPO appetite in the kingdom albeit at levels lower than we have seen previously.'
In Europe, there were 121 IPOs during the third quarter of the year, raising $12.7 billion, PwC IPO Watch Europe Report found.
Of it, $6.8 billion came from privatisations in July of government assets in Spain and Poland and $3.4 billion from the IPO of Dia, the Iberian discount supermarket retailer.
The last few weeks of September saw the European markets slumping further due to political and market uncertainties with only $31 million raised on European exchanges.
The extent of market turmoil was reflected in the postponement of the Spanish national lottery IPO in September. There has been postponements and withdrawals in Europe throughout 2011, but the IPO pipeline remains relatively stable despite market turmoil.
'The turmoil we are witnessing in Europe and the US is having an inevitable impact on the regional credit markets as investor appetite in the two economic zones for Middle East debt has historically been strong,' Drake said.
'It is likely that we will see lower debt issuance volumes or perhaps a shift towards a heavier Asian market bias for issuers,' he added.-TradeArabia News Service