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GCC Capital Markets Watch: Q4 2019 A remarkable quarter for GCC equity capital markets

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% of the annual GCC IPO proceeds for 2019.

4 IPOs in Q4 2019, down from five IPOs in Q4 2018 While 2019 witnessed record-breaking IPO proceeds, the number of listings dropped significantly (8 IPOs in 2019 v. 17 in 2018). $26bn raised from IPOs in Q4 2019 across the GCC, compared to $1bn in Q4 2018

Report by PwC

GCC equity capital markets attracted significant global attention in Q4 2019 with Saudi Aramco’s record-breaking IPO topping both the GCC and global rankings with the highest proceeds for the year. Naturally, the energy industry led the equity market in Q4 2019 with the Aramco’s USD 25.6bn listing on Tadawul and the USD 23m listing of Musandam Power Company SAOG on Muscat Securities Market.

Regional IPOs

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% 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.

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GCC quarterly IPO activity since 2013

GCC equity markets performance bu cumulative total return since 1 January 2018

Global IPOs

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 $71bn in Q4 2019 compared to 303 IPOs with proceeds of $57.6n in Q4 2018.

The Americas continued to lead the equity market during the year, accounting for 37% ($74.1bn) of proceeds and 24% in volume and Asia-Pacific came second, accounting 36% ($71.7bn) of proceeds and 63% of the number of IPOs. 

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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 USD 2.86bn and Industrial and Commercial Bank of China Limited, Dubai (DIFC) issued two bonds of USD 500m 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 USD 4.56bn. 

Mohamed ElBorno, Partner, Head of Assurance at PwC Middle East notes: “Q4 was a remarkable quarter in terms of equity capital markets. USD 26bn 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 USD 1.2bn 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.”

You can find the full report here.

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