Gulf IPO activity falls to lowest level for six years

PwC says investors' sentiment continues to be affected by geopolitical uncertainty, additional austerity measures

In total, proceeds in 2016 stood at $782 million from six deals compared to $1.4 billion raised from a similar number of deals in 2015.

In total, proceeds in 2016 stood at $782 million from six deals compared to $1.4 billion raised from a similar number of deals in 2015.

IPO activity in the Gulf region remained lacklustre during the last three months of 2016 with initial public offerings being put on hold, according to a new report by PwC.

Investors' sentiment continued to be affected by ongoing geopolitical uncertainty, governments' additional austerity measures accompanied by further spending cuts.

PwC said 2016 proved to be one of the weakest for IPO performance in terms of number of offerings, with just four completed - the smallest number since 2010.

The total proceeds raised ($781.7 million) was the lowest since 2013, according to PwC’s Capital Markets and Accounting Advisory Services team.

This compared to $1.4 billion raised from six deals in 2015.

In the GCC, Saudi Arabia commanded the market offerings in 2016 in terms of number of IPOs (3) and total proceeds raised ($745 million) representing 75 percent and 95 percent respectively of the overall GCC IPO activity.

Steve Drake, head of PwC’s Capital Markets and Accounting Advisory Services team in the Middle East said: “The year was marked by geopolitical uncertainty, ongoing economic downturn adding to increasingly volatile oil prices.

"Further fiscal tightening, austerity measures and declining liquidity in the financial sector continue to weigh heavily on investors’ confidence. Against this volatile environment, many offerings were put on hold, as businesses and investors wait for improved market conditions prior to investing in fresh equity.

"As the regional geopolitical scene stabilises and oil prices recover, market participants may regain confidence sooner than expected. There are number of positive signs for 2017 and we hope that the capital market in the GCC will overcome 2016 shockwaves.”

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