UAE dominates IPO market in GCC

Three firms raise Dh1 billion in first half of 2011

The UAE dominated IPO market in the GCC in the first half of this year with three public offerings of $272 million (Dh1 billion), according to a report by Kuwait’s Global Investment House.

Saudi Arabia saw just one IPO of a telecom company raising 300 million riyals ($93.3m).

All the initial public offerings (IPOs) were fully subscribed.

In total, four GCC companies offered their shares to the public during H1 2011, with an aggregate value of $364.6 million.

The first IPO of the year was that of Abu Dhabi based Insurance House, which took place from February 27 to March 11.  Insurance House’s IPO, which was fully subscribed, was looking to raise Dh66m ($18.6m), equal to 55 per cent of the company's authorised share capital of Dh120m.

 National Takaful Company (Watania), an Abu Dhabi based Shariah-compliant insurance company, was the second company to tap the equity market during H1 2011, as it took place from April 18 to May 01, offering 55 per cent of its capital to the public, valued at Dh82.5m ($23.6m). The company’s IPO received an overwhelming response as applications for 590m shares were received for the 82.5m shares offered to the public, which resulted in the IPO being oversubscribed by seven times.

IPO of Abu Dhabi-based developer Eshraq Properties was launched during the period from May 01, to May 11, 2011, to sell 55 per cent of its shares to the public to raise Dh825m ($229.9m). As much as 25 per cent of the value of each share was to be paid upon purchase with the rest to be paid over a period of two years. The IPO was fully covered.

In Saudi Arabia, IPO activity slowed down this year, as only one company floated its shares in H1 2011. Saudi Integrated Telecommunication Company (ITC) offered 35 of its capital to the public from May 2 to May 08, 2011. ITC’s SAR300m ($93.3m) IPO was oversubscribed by three times, with a coverage percentage of 294 per cent.

Market Breadth

The breadth of the GCC stock markets was titled towards decliners during H1, with 416 stocks ending on a lower note compared to 187 advancing stocks, while 69 stocks remained unchanged.

The market spread was negative in five out the six GCC markets; except in Saudi, which was the only market that had a positive advancers to decliners’ ratio.

Market capitalisation for the GCC markets stood at $722.2 billion by the end of H1 2011, down by 3.7 per cent compared to end of year 2010. The Saudi market constituted 48.3 per cent of the aggregate market capitalisation of GCC stock markets.

Total volume of shares traded stood at 64.5bn shares, with an aggregate value of $189.2bn, executed through 14.4m deals.
 
Market performance

Kuwait market was hit the hardest in H1, as it posted the steepest decline compared to its regional peers. Global General Index declined by 14.02 per cent by the end of H1 2011 as it closed at 192.19 points. Meanwhile, KSE price index dipped by 10.69 per cent by the end of H1 2011, reaching 6,211.70 points

Besides Kuwait, Muscat Securities Market (MSM) had a disappointing performance in H1 2011. MSM 30 index dipped by 12.41 per cent, as it ended at 5,916.47 points. Despite an $20bn economic aid package geared towards economic reforms in both Oman & Bahrain, neither market managed to reflect this positive initiative in its performance.

Meanwhile, Abu Dhabi Securities Exchange (ADX) performed better than its GCC peers, with the market’s index marginally retreating by 0.58 per cent.

Similarly, the Saudi market had a marginal decline of 0.68 per cent. The Saudi economy strengthened on the back of increased oil output and more government spending, thus capping the stock market’s loss, compared to its regional peers.

Global GCC Large Cap. 30 Index declined by 5.43 per cent in 1H2011 ending at 303.17 points, as most large capitalised stocks were hit hard.

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