JEDDAH: The final quarter (Q4) of 2015 echoed the sluggish initial public offering (IPO) performance in Q3 proving that 2015 was a volatile year for IPOs in the Gulf Cooperation Council (GCC).

The theme of uncertainty and negative market sentiment materialized in the second half (H2) of 2015 on the back of fluctuations in oil prices and ongoing regional and global political and economic instability, according to PwC Middle East Capital Markets and Accounting Advisory Services team.

Saudi Arabia witnessed the only IPO in Q4, 2015 by Alandalus Property Co., which raised $101 million from the deal. The IPO was oversubscribed and well received by investors and marked the first real estate sector offering on the Saudi stock exchange (Tadawul) in five years.

Q3 of 2015 saw no IPOs while Q2 proved to be the strongest quarter in terms of the number of offerings (4) and the money raised ($1.2 billion).

Looking at IPO performance in Q4, 2015, compared to the same quarter in the previous year (Q4 2014), the number and money raised was considerably higher in the prior year with $7.3 billion from a total of five floats, mainly driven by the largest IPO in the GCC in 2014 by National Commercial Bank (NCB).

With no IPOs in Q3 of 2015, the total money raised in H2 2015 was $101 million from one offering while $1.3 billion was raised from five IPOs in H1 driven by a stronger Q2 performance during the year.

In terms of performance in H2, 2015, compared to the prior year, a total of seven IPOs raised $8.9 billion in H2, 2014. Therefore, in many ways Q4, 2015 was a disappointing quarter for IPO performance.

Total proceeds in 2015 stood at $1.4 billion from six deals compared to $10.8 billion raised from 16 deals in 2014, $702 million from nine deals in 2013, $1.7 billion from nine deals in 2012, $789 million from nine deals in 2011 and $2 billion from 12 deals in 2010, proving that although 2015 was the lowest year in terms of number of offerings over the past five years, the total value of offerings improved.

Furthermore in the same period, excluding 2014, the average offering value of IPOs in 2015 was the highest. The Saudi Ground Services offering back in June marked the largest IPO during 2015 raising $752 million.

In the GCC, Saudi Arabia dominated the IPO market in 2015 in terms of number of offerings (6) accounting for 67 percent of the total proceeds raised ($1.1 billion), accounting for 77 percent of the total.

Steven Drake, head of PwC’s capital markets and accounting advisory services team in the Middle East said: “The theme throughout 2015 has been fluctuation in oil prices, regional political instability and global economic downturn, which we have seen has impacted the Gulf’s IPO market via decline in valuations, negative investor sentiment, and more so in the second half of the year where there was only one listing in six months.”

Global IPO issuance in 2015 was reasonably strong, despite increased volatility. Particularly in Q4, the IPO market was driven by large privatization IPOs.

Debt market activity in the GCC in Q4, 2015 continued to be muted.

Steve Drake, head of PwC’s capital markets and accounting advisory services in the Middle East, said: “We have seen dampened activity both in the bond and sukuk markets this quarter demonstrating that the region cannot remain immune to external factors. The concern however is the potential increase in supply which may result in an increase in the cost of borrowing.”