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Fri 19 Aug 2011 09:43 AM

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GCC sees 50% slump in IPOs in H1, says PwC

PricewaterhouseCoopers study says deal values plummet 57% amid continuing investor caution

GCC sees 50% slump in IPOs in H1, says PwC
Qatari investor stock exchange

The number of initial public offerings in the GCC fell by 50 percent in the first half of the year, according to a new report by PricewaterhouseCoopers.

The first six months of the year saw just four compared to the eight IPOs in the first half of 2010.

Deal values also plummeted 57 percent to $358m compared to the $830m raised during the same period last year.

PwC said it believes that the drop in the first half of 2011 in both the number and value of GCC IPOs was "reflective of the continuing investor caution in light of current global economic uncertainties which has weighed down demand for new issues".

Unlike last year, where the IPO activity in the GCC region was dominated by Saudi Arabia’s Tadawul, the UAE bourses were the most active in the region accounting for three out of the four IPOs, representing 74 percent of the total capital raised.

Steve Drake, head of PwC Capital Markets Middle East, said: “The three IPOs in the UAE during the first half have brought a much-awaited end to the drought of IPOs on the UAE exchanges.

"Most notably, the IPO by Eshraq Properties, a company in the recession-hit real estate sector, is a major confidence booster for both the investors as well as other companies looking to IPO in the near future."

He added: "We believe that there is pent up demand for IPO capital in the market however realistic pricing and a strong growth story are crucial to draw investor interest and market demand.”

Drake said PwC saw the Saudi market picking up in the second half of the year, with a number of flotations coming to the Tadawul.

The debt market in the GCC continued to grow with 2011 first half-year results improving compared to the same period last year.

However, a large proportion of the debt issues in the first half of 2011 were sovereign and government-related entities, PwC said.

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