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By Fareem Chagla
Dubai | March 27, 2016 | 12:15
The IPO market in the GCC region has, since the beginning of the current year, been abuzz with murmurs around the possible IPO of Saudi Arabian Oil Co., the state-owned company better known as Saudi Aramco. With oil reserves more than 10 times than that of ExxonMobil, Saudi Aramco could have a market cap measured in trillions of dollars. Amidst this background, we outline here a look at 2015’s IPO market for the region and an update around possible or planned listings for the current year along with a status of the same.
2015 saw a considerable slowdown in the region’s IPO activity with only 5 listings compared with 14 in 2014. Saudi Arabia’s Tadawul remained the most active market with 4 IPOs as against 6 in the previous year.
Source: Saudi Stock Exchange; Muscat Securities Market (Prices as on 23rd March 2016)
Last year did see a few cancellations and delays too. While some did not see adequate subscriptions received, others cited unsupportive market conditions. Arabian Technical Contracting Co. (Kingdom of Saudi Arabia) cancelled the proposed IPO on 20th May 2015; Massar Solutions (UAE) launched its AED 576 mn IPO in January 2015. However, the listing was subsequently postponed indefinitely on account of insufficient applications having been received.
Tadawul, the region’s largest exchange by market cap had indicated in December 2015 its plans to go public in 2018. This announcement coincides with murmurs of an IPO of Saudi Aramco, the world’s largest oil producer. [Read: An Oil Play: How Saudi Aramco would stack up against the competition]. Some indications around IPOs within the region for the current year include
In the immediate future, a planned listing is that of Middle East Healthcare Co. (Kingdom of Saudi Arabia), details of which are:
Offer date: 3rd March 2016 – 9th March 2016
Offer involved a total of 27.61 million shares, or 30% of its capital
Status: The IPO was oversubscribed 274.2% according to Samba Capital, the underwriter and lead manager in the offering. A total of 405,960 retail investors invested SAR 1.45 billion through the purchase of 22.71 million shares.
Another trend visible has been an increase in the number of companies in the region showing a keenness to list shares on overseas exchanges. Emaar Properties in a recent shareholder meet outlined a probable monetizing of core assets through IPOs of some divisions, including Turkey or India among other plans. It is worth noting that Emaar Misr, a subsidiary which floated an IPO in June 2015 had to delve into its price stabilisation fund 30 days after the shares began trading.
The year-to-date has seen the equity markets globally show signs of a revival after a torrid beginning. It remains to be seen if this pick up witnessed recently is enough to drive sentiment within the corporate sector and whether the IPO market does see a higher level of interest than the previous year. The latest EY Global IPO Trends (2016 1Q) extrapolates the performance over the current quarter to make predictions for the rest of the year: