Initial public offerings (IPO) in the GCC markets dropped in the fourth quarter of 2011 as three IPOs raised only $212 million, registering a 79 percent drop in the offering values year on year, PricewaterhouseCoopers (PwC) said a report. The IPO value fell by 3 percent compared to the third quarter of 2011, the report added. However, Saudi Arabia continued to lead the GCC markets with two IPOs in the last quarter of 2011 contributing $148 million or 70 percent of the total amount raised on the GCC exchanges. The only other offering in the GCC during the fourth quarter was Oman's SMN Power Holding which raised $63.8 million. "The Kingdom continued to be the most active IPO market in the region during recent times, however, the exchange underperformed considerably in 2011 as IPO volumes fell 44 per cent whereas total money raised decreased by 55 percent compared to 2010," said Steve Drake, head of PwC Capital Markets in the Middle East region. The Kingdom hosted five IPOs on Tadawul during 2011 which contributed 58 percent of the total amount raised in the GCC region. In 2011, there were a total of nine IPOs in the GCC raising a total of $789 million which was well below 2010 levels where 12 IPOs raised $2.03 billion, a 25 percent drop in IPO volumes and a 61 percent fall in the value. "As we are moving into 2012, we are seeing improvements in confidence on the supply side and so would expect to see increased activity in certain regional markets during 2012," Drake noted. Despite a reasonable start to 2011 with three IPOs in the first half of the year raising a total amount of $265 million, the UAE exchanges remained largely subdued with no IPO activity during the second half, said the PwC report. "Investor risk caution coupled with issuer reluctance to sell at perceived lower valuations contributed to a slow and stifled year in the equity markets," Drake said. Although the number of IPOs in the last quarter of 2011 remained the same as the fourth quarter of 2010, the average IPO size decreased significantly from $343 million to $71 million in 2011. "Issuers in the GCC deferred their IPO plans in 2011 as global economic instability such as the debt crisis seen in the eurozone and the regional political unrest impacted investor confidence," he further said.
