A damp 2011 For GCC IPOs

Issuers and investors remained wary of volatility in the capital markets, according to PwC.

Initial public offerings (IPO) in the GCC markets continued spiralling downwards in the fourth quarter of 2011, according to a report by PricewaterhouseCoopers (PwC). The three IPOs in Q4 2011 raised a total of $212 million, with offering values falling 79 per cent year-on-year.

Overall, in 2011, there were nine IPOs in the region, raising a total of $789 million, compared to 12 IPOs in 2010 that raised $2 billion- a 25 per cent decrease in IPO volumes and a 61 per cent decrease in value.

“Investor risk caution coupled with issuer reluctance to sell at perceived lower valuations contributed to a slow and stifled year in the equity markets,” said Steve Drake, head of PwC Capital Markets in the Middle East. “We are beginning to see issuer interest in some regional markets although the real test will come when we see the first IPO of 2012 and the level of interest shown by the investor community.”

Saudi Arabia is currently the most active IPO market in the region, but the exchange “underperformed considerably in 2011” as IPO volumes fell 44 per cent whereas total money raised decreased by 55 per cent compared to 2010, said the report.

In the UAE, although three IPOs in the first half of the year managed to raise $265 million, the second half of the year saw no IPO activity.

Oman’s last quarter issuance was the only other issuance outside the UAE and Saudi Arabia as all other GCC exchanges remained dormant during 2011, said PwC.