The initial public offering (IPO) market in the Gulf Cooperation Council (GCC) in the second quarter (Q2) of 2014 started off and ended on a high, with a total of seven IPOs, compared to two in Q1 2014. The quarter witnessed its first IPO in April with the UAE based company, Emirates REIT (CEIC) Ltd., listing on NASDAQ Dubai Ltd. and raising $ 201 million. Also in April, Marka PJSC, a UAE-based company, listed on the Dubai Financial Market (DFM) raising $ 77 million.

The Saudi stock exchange (Tadawul) witnessed three IPOs in Q2, 2014 by Umm Al-Qura Cement Company, Abdulmohsen AlHokair Group for Tourism and Development Company and Al-Hammadi Company for Development and Investment raising $73 million (SR273.75 million), $220 million (SR825 million) and $168 million (SR630 million), respectively.

In Oman, there were two power company listings — Al-Suwadi Power Company SAOG and Al-Batinah Power Company SAOG, raising $84 million and 78 million, respectively.

The total value of the seven IPOs in Q2, 2014 was $ 902 million, a slight decrease of 5 percent compared to Q1, 2014, although this is a considerable increase compared to the same quarter last year where a total of three IPOs raised 48 million.

Looking at IPO performance for the first half of 2014, there were a total of nine IPOs raising $1,855 million, compared to a total of five IPOs raising $385 million in H1 2013, an 80 percent increase in volume and 381 percent increase in value.

IPO performance and activity in H1, 2014 and the positive responses from investors is a testament to the recovery of confidence in the market by both issuers and investors.

The outlook for IPOs in the GCC appears to be strong particularly looking toward the latter part of 2014 and into 2015.

On the cross border front, the trend seems to continue with regional companies looking to list on international markets. However, Q2, 2014 proved to be challenging as we saw several companies postponing their planned IPOs despite the recovery in markets.

Steve Drake, head of PwC’s capital markets in the Middle East region said: “Equity capital markets performance in the region in the H1 2014 improved considerably with a total of nine listings, of which two were on the UAE stock exchanges which shows signs of recovery in that market. However, the average offering value is still relatively modest albeit it has improved compared to the previous year. Looking ahead, the remainder of 2014 looks very strong and we would expect to see this continue into 2015.”

The European IPO market is enjoying buoyant conditions driven by rising market confidence and demand for new shares as investors seem relieved that the eurozone crisis has dwindled. Both in terms of number of transactions and money raised European IPO activity for Q2, 2014 ($ 32.7 billion from 106 IPOs) strongly outperformed Q2, 2013 ($7 billion from 38 IPOs).

Eleven of the quarter’s twenty largest IPOs were executed in Europe. Although the IPO activity was spread across the continent, London Stock Exchange remained the leading European exchange with three out of the top ten European IPOs in both Q2, 2014 and H1 2014 listing in London.

Overall, the UK IPO market saw 72 IPOs in H1, 2014, raising a combined total of $22.7 billion. The Spanish IPO market continued its Q1 2014 uptick with flotations such as the real estate company Merlin Properties raising $ 1.7 billion in June. Other significant European IPOs include the European stock exchange operator Euronext raising $1.1 billion on Euronext Amsterdam, Euronext Brussels and Euronext Paris in June.

Similar to the situation in the United States, PE-backed IPOs made a robust contribution to European IPO activity in the first half of 2014, accounting for 35 percent of the total number of deals and 53 percent of the total amount of money raised.

The GCC debt capital markets in 2014 had an active second quarter, particularly in corporate bonds and sukuk, with large size deals that received a positive response from investors, which was demonstrated by the tight yields achieved.

The UAE corporate bond issuances were dominant this quarter, where we saw sizable issuances from DP World Ltd., issuing a $1 billion 10-year bond, and Etisalat issuing two $500 million bonds in five- and ten-year tranches and two $ 1.6 billion bonds in seven- and twelve-year tranches.

Other noteworthy issuances include Commercial Bank of Qatar issuing a $750 million bond and the Bahrain-based Gulf International Bank BSC, issuing a $533 million bond. On the sovereign front, Central Bank of Kuwait issued a $35 million treasury bond and nine tranches of $177 million treasury bonds amounting to $ 1.6 billion. Also in Q2, 2014, the Qatar Central Bank issued three government bonds amounting to $261 million, $577 million and $ 261 million.

The sukuk market in the GCC saw corporate issuances from Saudi Electricity Global Sukuk Company 3 issuing a $1 billion and $1.5 billion sukuk maturing in 30 and 10 years, respectively.

Also, the UAE-based Emaar Malls Group, issued a $750 million sukuk maturing in 10 years. On the sovereign front, the Central Bank of Bahrain issued three tranches of a $53 million sukuk and three tranches of a $95 million sukuk.

“DCM in the GCC has grown and continues to grow as demand for debt remains strong. In Q2, 2014, we saw sizable issuances, many of which were oversubscribed. The debt market in the region is expected to continue to flourish due to factors such as government spending, development of new projects and macroeconomic conditions, to name a few. However, there still remains an element of risk or uncertainty in the region as a result of the political unrest in the Middle East, which can contribute to the risk premiums seen on regional issuances,” Drake added.