x Abu Dhabi, UAESunday 21 January 2018

Patience needed as backlog of Gulf IPO plans finally dusted off

Companies hurried to prepare share sales during the quarter as Dubai and Saudi Arabia's stock markets entered bull markets, the euro-zone debt crisis eased and the dust of the Arab Spring settled.

Companies hurried to prepare share sales during the first quarter as Dubai and Saudi Arabia's stock markets entered bull territory, the euro-zone debt crisis eased and much of the turmoil of the Arab Spring abated.

A single initial public offering in the Gulf during the first three months of the year raised US$62.4 million (Dh229.2m), according to data from Bloomberg News. Takween Advanced Industries, a plastics manufacturer in Saudi Arabia, listed on the Tadawul All-Share Index in February.

But that is an improvement from zero listings during the same period a year earlier, when the Arab Spring was in full swing and capital markets were viewed as too risky for all but the strongest Middle Eastern companies. Listings resumed in the remaining part of the year, with the total raised in the Gulf through IPOs last year amounting to $724.8m.

As Gulf markets began this year in bullish mood, a number of companies dusted off plans for IPOs planned before markets fell after the global financial crisis.

In January, the Kuwait Stock Exchange announced its intention to list publicly, while the Palestine Securities Exchange finalised plans to go public in a listing due this month.

NMC Health is expected to raise as much as $281m in a London Stock Exchange listing the company announced last month.

The company's decision to sell shares to international investors has drawn criticism from local exchange officials, such as Jeff Singer, the chief executive of Nasdaq Dubai, who said the UAE should not allow companies to list internationally before doing so locally.

Manazel Real Estate and Abraaj Capital are also rumoured to be planning IPOs.

The pipeline of IPOs in the region was split between companies whose owners were seeking to exit their investments and companies seeking capital for expansion, said an executive at an international investment bank, who asked not to be identified. "There has been a marked change in liquidity," the banker said. "The secondary market has had a great start to the year. But an IPO takes time to get ready."

In contrast to sluggish sales of shares, regional debt markets have been quick off the mark with the strongest start of a year on record. Bond sales in the Gulf totalled $12bn, compared with $6.3bn during the same period last year.

The quarter also featured the region's first sale of a bond denominated in Chinese yuan. Emirates NBD raised 1bn yuan (Dh583 million) through the so-called "dim sum" offering, using a "tap" option to increase the size of the sale after meeting high demand. The bank is planning further yuan-denominated bond sales this year, a spokesman said.

Sukuk sales reached $6.1bn, compared with $1.5bn during the corresponding period last year.


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