Adnoc Distribution and Emaar Development propel fourth quarter GCC listings

Total raised via public listings surges to $2.5bn compared with $37m in fourth quarter of 2016

The combined value of the GCC equity capital market deals in the fourth quarter of 2017 surged to $2.5bn, as IPO activity picks up in the region. Faisal Al Nasser / Reuters

The combined value of initial public offerings (IPOs) in the Arabian Gulf surged to $2.5 billion (Dh9.18bn) in the fourth quarter of 2017, dwarfing the amounts raised in the same period last year as well as the third quarter of 2017, as IPO activity in the region picked up after a lull of two years.

The total value of public listings in the last three months of 2017 compares with just $37 million raised through equity capital market transactions in the year earlier period, and $234m for the third quarter of the 2017, according to PwC’s latest GCC Capital Markets Watch.

Stock markets of the six-member economic bloc received eight listings in the last quarter of the 2017, compared to just one in the same period in 2016, and five recorded in the third quarter of 2017, PwC said.

Public offerings are making a comeback following a dry spell over the past couple of years, as a slowdown in economic growth forced several companies to shelve plans to raise funds via share sale amid concerns of not getting proper valuations for their businesses.

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“GCC IPO activity ended 2017 on a high, supported by government policies and improved market conditions,” said Steve Drake, head of PwC’s capital markets and accounting advisory services in the Middle East. “We are seeing renewed appetite for cross-border IPOs and an increase in confidence from institutional investors in GCC equity markets.”

The outlook for 2018 is positive with a strong pipeline of deals, however the spotlight will remain on Aramco’s possible share sale in 2018, he noted.

Stock exchanges in the UAE - Dubai Financial Market and Abu Dhabi Securities Exchange - led regional IPO activity in terms of funds raised during the most recent quarter, with the listing of Emaar Development and the Adnoc Distribution. The deals raised a combined $2.2bn, accounting for 88 per cent of total value of GCC share floats for the three month period.

Saudi Arabia’s Tadawul, the biggest exchange in the region by market capitalisation, received three real estate investment trusts on its trading platform in the last quarter, which raised a combined $209m. Oman’s Muscat Securities Market also saw three listings, which yielded a total of $82m.

Year-on-year, the total number of GCC public offering climbed to 28, from only four in 2016. Tadawul’s parallel market Nomu, welcomed nine listings. Total proceeds raised during 2017 also rose by $2.5bn, a 322 per cent rise on the amount raised in 2016.