No share offers in Gulf region in third quarter: PwC

Muscat: There was no initial public offering (IPO) across the Gulf Cooperation Council (GCC) region in the third quarter of 2016, thus reflecting the most depressed IPO market conditions since third quarter of 2015, according to a report released by PriceWaterhouse Coopers (PwC) Middle East.
Although activity in 2016 has generally been quite low, the third quarter of 2016 activity levels perhaps best reflect the impact of uncertainties seen across the region. As oil prices continue to show no signs of increasing significantly, regional governments have been grappling with the economic impacts this has caused and have started to implement measures aimed at addressing these impacts. However, in the short term, liquidity continues to be a problem for our regional economies and this has impacted equity market activity, said the PwC report.
In the region, third quarter is host to the summer vacation, the Holy month of Ramadan and Eid, which are usually associated with slower IPO activity. In terms of performance compared to the prior period, the second quarter 2016 had two issuers go to market (Al Yamamah Steel Industries and L’azurde Company for Jewellery) on the Saudi Stock Exchange, Tadawul raising total proceeds of $274 million.
Saudi Arabia continued to dominate the IPO market in the region with all listings during 2016 being on Tadawul accounting for 100 per cent of the IPO market.
Steve Drake, head of PwC Middle East’s Capital Markets and Accounting Advisory Services team in the Middle East said, “Cost cutting policies and austerity measures driven by the prolonged low oil prices result in higher volatility and uncertainty in the markets. Whilst many companies have expressed interest in going public, they are still waiting for investor sentiment to improve and liquidity to come back to the market. As a consequence, we would expect to see this trend continue into the fourth quarter of 2016.”
Global IPOs
With volatility low and easing measures firmly in place, conditions were healthy for raising equity financing. IPO activity in the third quarter of 2016 increased compared to the second quarter of 2016 and third quarter of 2015. The amount of money raised via IPOs stood at $35.8 billion via 230 deals, compared to $24.4 billion via 178 in the third quarter of 2015 and $69.6 billion via 248 deals in the third quarter of 2014. This translates into 47 per cent increase in proceeds compared to the previous year.
However, large differences exist between regions; whereas the Asia-Pacific IPO markets were very active throughout the third quarter, the Americas and EMEA regions suffered from political uncertainty. Asia-Pacific accounted for 74 per cent (170) of the total number of IPOs and 68 per cent ($24.2 billion) of the total amount of proceeds in the third quarter of 2016.