GCC equity capital markets attracted significant global attention in the fourth quarter (Q4) of 2019 with four initial public offerings (IPOs) raising $26 billion, said professional services firm PwC in a new report.
The energy industry led the equity market during the quarter with the Aramco’s $25.6 billion listing on Tadawul and the $23m listing of Musandam Power Company SAOG on Muscat Securities Market.
In contrast to the subdued IPO markets in the first three quarters of the year when only four IPOs took place, GCC countries witnessed as many IPOs in Q4 alone representing 96 per cent of the annual GCC IPO proceeds for 2019.
Tadawul continued to be the front runner amongst the GCC stock markets in terms of both number of listings and proceeds raised. Whilst 2019 experienced record-breaking IPO proceeds, the number of listings significantly reduced to 8 IPOs, compared to 17 in 2018.
Cross-border activity remains an important factor for IPO levels with observable trends continuing for technology companies to look to the New York markets and companies from Africa, the Middle East and the CEE looking to London.
The final quarter of 2019 was nonetheless a strong quarter, faring better than its equivalent in 2018 in terms of both proceeds and volume. Globally, 338 IPOs raised $71 billion in Q4 2019 compared to 303 IPOs with proceeds of $57.6 billion in Q4 2018.
The Americas continued to lead the equity market during the year, accounting for 37 per cent ($74.1 billion) of proceeds and 24 per cent in volume and Asia-Pacific came second, accounting 36 per cent ($71.7 billion) of proceeds and 63 per cent (660) of the number of IPOs.
GCC market continues to host high value sovereign sukuk and bonds issuances
Q4 2019 experienced multiple high value transactions with sovereign and corporate sukuks dominating the market. Dubai became one of the largest global centres for sukuk listings by value when IDB Trust Services Limited, a subsidiary of Islamic Development Bank, listed sukuk worth $2.86 billion and Industrial and Commercial Bank of China Limited, Dubai (DIFC) issued two bonds of $500 million each in October 2019, on Nasdaq Dubai. This helped secure the position of the largest overseas bond issuer listed on the exchange by value with total listed bonds value of $4.56 billion.
Mohamed ElBorno, partner, Head of Assurance at PwC Middle East said: “Q4 was a remarkable quarter in terms of equity capital markets. $26 billion was raised, primarily relating to the IPO of Saudi Aramco on Tadawul - the world’s highest value listing to date. It was also an eventful year in the GCC debt market with Dubai becoming one of the largest global centres for sukuk listings by value. Saudi Arabia was also active, with the Ministry of Finance issuing $1.2 billion worth of sukuk in Q4 alone.
“While we do expect macroeconomic and geopolitical uncertainties to continue in the near term and inevitably affect GCC market activity, companies that are well prepared and have solid investments will continue to benefit from the region’s debt and equity capital markets.” – TradeArabia News Service