New NOMU market boosts Gulf to five-year IPO high

The launch of a parallel market for smaller companies in Saudi Arabia helped boost the total number of initial public offerings (IPOs) in the Gulf during the first quarter of 2017.According to PwC, the GCC region saw 10 IPOs issued during Q1, the highest quarterly number for five years.

PwC said the launch of NOMU, an alternative equity market to Saudi Arabia’s Tadawul, aimed at smaller cap companies, was marked by the successful listing of seven IPOs.
On the primary exchange front, the largest regional offering in Q1 was by Qatar-listed Investment Holding Group, which operates various contracting businesses, raising proceeds of $138 million.

In terms of IPO performance in Q1 compared to the same period in the prior year, the number of offerings has significantly increased, with 10 IPOs compared to 1 but the total proceeds raised was 15 percent lower.
PwC said the low offering values in this quarter mainly relates to the nature and characteristics of the NOMU market, one of which is a lower market capitalisation requirement compared to Tadawul, opening the doors for the listing of small to medium size enterprises.
Steve Drake, PwC partner and head of PwC’s Capital Markets and Accounting Advisory Services team in the Middle East said: “An interesting start to the year, with the launch of Tadawul’s alternative equity market resulting in an influx of listings during the first three months of the year.
“As the region continues to adjust to a different oil price environment, we are starting to see signs of market recovery and activity which are positive indicators to what we hope to be an improved year for IPOs in the region. Furthermore, government initiatives across the region, including large scale privatisation activity is expected to boost capital markets activity in the next couple of years”.

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