The initial public offering (IPO) of Qatar Aluminum Manufacturing Company (Qamco), which was oversubscribed 2.5 times, constituted more than 40% of the total proceeds raised from maiden offers in the Gulf Cooperation Council (GCC) during the fourth quarter of 2018, according to PricewaterhouseCoopers (PwC).
"The Qatar Stock Exchange witnessed its largest IPO by proceeds in four years, with Qamco's listing generating $758mn — over 40% of the total proceeds raised in the GCC in 2018," PwC said in a report.
The country’s hydrocarbon bellwether, Qatar Petroleum, had offered 273.43mn shares of Qamco at QR10.1 (including the listing costs of 10 dirhams). The country's commercial banks had extended loans to Qataris on liberal terms for subscribing into the IPO.
The report found that more than 50% of the total 2018 IPO proceeds (in the GCC) were raised during the last quarter of the previous year.
The fourth quarter (Q4) was a "remarkable" quarter for the GCC equity markets in 2018, with five IPO transactions generating total proceeds of $1.03bn, 42% of the annual GCC IPO proceeds.
The equity markets remained active in 2018, although showed declining statistics in terms of primary IPOs compared to 2017. Q4 was a noticeable quarter for 2018, but still some way behind the eight IPOs in the last quarter of 2017, which generated $2.46bn.
"The GCC IPO outlook for 2019 hinges on the oil price as well as the geopolitical climate. There is a cautious investor sentiment which is expected to linger in the early months of 2019," it said.
Highlighting that the GCC debt market outperformed its peers; it said despite the increasing US Fed interest rate, fluctuating oil prices and global economic downturns, the GCC bond market has shown commendable performance with it delivering stronger risk-adjusted returns than many other traditional bond markets since 2013.
"The decision to include GCC nations in JP Morgan’s Emerging Market Bond Index (EMBI Index) from January 2019 and the ascending tendency of oil prices were likely to have contributed to the overall GCC performance and boosted the issuance of GCC debts in 2018," according to PwC.
Stressing that macro-economic and geopolitical uncertainties are looking to remain in the immediate future, Steve Drake, PwC Middle East Capital Markets Leader, said as the market adjusts to the new norm, capital markets opportunities are still present for companies that are well prepared.