Gulf stock exchanges witness raising of over $1billion IPOs

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Gulf stock exchanges witnessed the raising of more than $1 billion by a total of four initial public offerings (IPOs) during the second quarter of this year compared to three IPOs which raised $340 million in the same period last year, a report said.

According to Pricewaterhouse Cooper’s latest Capital Markets report, new listings, despite being limited to a few regional exchanges, helped soak up some of the excess liquidity in the region and attract investor appetite.

The findings revealed that the average IPO offering value rose to $276 million in the quarter compared to $39 million the first quarter and $133 million in the second quarter of 2011.

The debutants included Al Tayyar Travel Group, a family business in the travel and tourism sector and Saudi Airline Catering Company, the catering unit of Saudi Airlines, raising $365 million and $354 million on the Saudi stock exchange respectively.

The IPOs received an overwhelming response in the market despite the weak global equity market outlook and falling oil prices, signifying improving investor confidence.

An IPO worth $227 million by Najran Cement Company also on the Saudi stock exchange and the Bank Nizwa IPO, a newly established Islamic bank in Oman, raising $158 million, were some notable issuances.

“Whilst IPO activity in the second quarter of the year could be seen to be encouraging, it is still difficult to determine if we are seeing any real recovery,” Steven Drake, PwC Middle East capital markets head, said in a statement.

“With what is happening in the euro zone and the slowing of some of the high growth markets such as China and India, it is difficult to determine the impact this will have on our regional markets.

“Our outlook for the rest of 2012 is for a continued IPO upward trend in the Saudi Arabian market with perhaps limited to no activity on other regional markets,” he added.

According to the report, the region’s heavy infrastructure development plans and its financing remained strong along with the need to service existing debts.

The PwC’s findings disclosed Sukuk’s continued top performance in the region compared to conventional bonds this year with Saudi Arabia and UAE being the most active.

“The debt markets in the GCC seem to have remained largely impervious to global economic instability due to continued government support of these issuances,” Drake said.

“Despite fluctuating oil prices and turmoil in other markets, the GCC continues to remain of interest to both regional and international investors looking for exposure to regional fixed instrument securities,” he added.

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