Dubai As the initial public offerings (IPOs) in the Gulf Cooperation Council (GCC) market witnessed another bad year, analysts see a sluggish year ahead for new issues.

Three IPOs in the GCC in the fourth quarter of 2011 raised a total of $212 million, with values falling a marginal 3 per cent compared to the previous quarter but down 79 per cent year on year, PriceWaterhouseCoopers ( PwC) said in a report Tuesday.

Saudi Arabia continued to lead with two IPOs in the quarter, contributing $148 million or 70 per cent of the total raised in the GCC.

The only other IPO in the quarter was Oman's SMN Power Holding which raised $63.8 million (Dh234.6 million).

Although the number of IPOs in the remained the same as in the same period of 2010, the average size fell from $343 million to $71 million.

"Investor risk caution coupled with issuer reluctance to sell at perceived lower valuations contributed to a slow and stifled year in the equity markets," said Steve Drake, head of PwC Capital Markets in the Middle East.

He attributed the wait-and-see attitude to regional political unrest and the European debt crisis.

Total issuance

There were nine IPOs last year in the GCC, raising a total of $789 million, well below 2010 levels when 12 IPOs raised $2.031 billion.

This equates to a 25 per cent decrease in IPO volumes and a 61 per cent decrease in value.

In sharp contrast to IPO issuance, the GCC bond and sukuk markets continued to grow during 2011 with a number of sizeable transactions.

"We are beginning to see issuer interest in some regional markets although the real test will come when we see the first IPO of 2012 and the level of interest shown by the investor community," said Drake.

Qatar market

The establishment of a secondary IPO market in Qatar, as well as talk of Saudi Arabia opening up its markets to foreign ownership, could make both markets more attractive, but progress in talks to merge the Abu Dhabi Stock Exchange and Dubai Financial Market — a move that would significantly boost liquidity — seem to have stalled.

"Regionally we are monitoring a pipeline of corporates that are aspiring to access the equity capital market in the GCC and indeed internationally, ranging from business at an early pre-IPO stage to issuers who are undergoing an approval process with the respective listing authorities," said Adnan Fazli, director in the Capital Market Transaction Services team at Deloitte in the Middle East.