Mubasher: Initial Public Offerings (IPOs) in the Arabian Gulf countries had a robust year in 2017, after witnessing muted activity in 2015 and 2016, according to a recent report by Kamco Research.

Kamco Research believes that the outlook for IPO markets in the GCC in 2018 will continue to depend on the alleviation of geopolitical risks, stability of oil prices, better macroeconomic data points and stable secondary capital markets.

The IPO market in the GCC was higher than the prior two years combined, as the total number of corporate IPOs and REIT IPOs combined in the region jumped to 25 issuances from 4 issuances witnessed in 2016 and 6 issuances witnessed in 2015, and also the highest since 2007.

The report also noted that capital issuances via IPOs was at a three-year high, as capital raised reached $3.2 billion, compared to $0.7 billion in 2016 and $1.5 billion in 2015.

Global backdrop for IPOs was also extremely strong, as the number of deals was the highest since 2007.

The number of IPOs globally jumped 49% in 2017 to 1,624 deals, compared to 1,093 deals in 2016, according to a recent report by Ernest and Young (EY) that also showed that proceeds grew 40% year-on-year from $134.5 in 2016 to $188.8 billion in 2017.

Saudi Arabia led the GCC IPO market with the highest number of IPOs.

The number of IPOs in Saudi Arabia jumped to 16 in 2017 from 4 deals witnessed in the year before.

Meanwhile, UAE accounted for over 70% of the total capital issuances, largely due to the two mega IPOs of Emaar Development and ADNOC, at $1.3 billion and $851 million, respectively.

Following the UAE with 2.2 billion, was Saudi Arabia with capital issuances of $767 million, as REIT issues and parallel market IPOs also supported the activity in 2017.

It is worth noting that in 2016, the Saudi market was the only one to witness IPOs among the GCC countries.

“Apart from Saudi Arabia and UAE, Oman saw significant activity in their primary capital markets, albeit from Muscat Securities Market’s (MSM) parallel market, as five IPOs were witnessed, four of which were Insurance players, Al Ahlia Insurance, Vision Insurance, National Life and General Insurance, and Oman Qatar Insurance.”

The total issuance proceeds in Oman amounted to $112 million in 2017, the report noted.

In Qatar, only one deal was witnessed with the Investment Holding Group IPO that totalled $135 million.

Business activity in Doha is still affected by the Arab boycott, which severely affected the Qatari market and discouraged more investments.

“Though we feel larger corporates would look at the aforementioned conditions to go ahead with their IPOs, we expect parallel market activity in Saudi Arabia to pick up, especially with the Saudi CMA’s decision to give foreign investors complete access to the Nomu index in 2018,” said Kamco.

“We further expect more REITs in the region to be listed in 2018 as well. Moreover, apart from the anticipated Aramco IPO from Saudi Arabia, more state-owned enterprises (SOE) and quasi-government owned assets in the GCC are expected take the primary market (IPO) route in the medium term,” the report concluded.