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Friday, 12 July 2013

Saudi Arabia: sukuk market gains momentum in 2nd quarter 2013

Depressed initial public offering (IPO) activity in the Gulf Cooperation Council (GCC) continued into the second quarter (Q2) of 2013 with three new listings raising a total of only $ 48 million. This compared to two IPOs in Q1, 2013 raising an aggregate of $ 337 million, representing an 86 percent decrease in total value raised.

The average offering value dropped 94 percent this quarter compared to the same quarter last year where four IPOs were witnessed raising a total of $ 1.1 billion. The total value raised in Q2, 2012 was the result of a stronger performance in the Saudi market, where out of the total four IPOs, three were Saudi-based. While the value of offerings significantly dropped this quarter, the number of offerings remained relatively stable at 3 IPOs.

The Muscat Securities Market (MSM) witnessed its first listing of the year with the $ 6 million IPO of Sharqiyah Desalination Company which, with a small offering in value terms, received a strong response in the aftermarket. The other IPOs in Q2, 2013 comprised two Saudi-based insurance companies namely Aljazira Takaful Taawuni Company and AIG-ANB Cooperative Insurance Company, both listed on the Tadawul with offering values of $ 28 million and $ 14 million, respectively.

The most prominent share offering during the quarter was that of the Abu Dhabi-based Al Noor Hospitals Group, which listed 33 percent of its equity on the premium segment of the London Stock Exchange (LSE), raising total proceeds of $ 342 million. Al Noor is the second health care service provider in Abu Dhabi to have opted for an international listing after NMC Health Plc, which raised $ 187 million in an IPO on the LSE in 2012.

Steve Drake, head of PwC’s Capital Markets business in the Middle East region, said: "Concerns looming over the economic slowdown in certain global markets and the elevated political instability in Egypt and other Countries in the Middle East would appear to have dampened investor appetite and contributed to the low offering values we have seen this quarter. Until volatility in global equity markets and the political situation stabilizes, regional equity markets are likely to remain subdued. However, we continue to see interest in companies looking to list within the next 12 to 18 months."

In contrast, Europe’s IPO markets have continued to gain momentum in Q2, building on the successful start to the year, with $ 6.8 billion being raised, a 58 percent increase on the $ 4.3 billion raised in the first quarter of 2013. Over 81 percent of proceeds raised in Q2 was generated from the top 10 deals.

Of note is the IPO of bpost, Belgium’s national postal service on Euronext and Platform Acquisition Holdings, the first major special purpose acquisition company to IPO in London since Vallares in Q2 2011.

The post IPO performance of the PE-backed IPOs in 2013 has been encouraging, particularly in London where they have achieved significant gains on the IPO price since listing and have also outperformed the FTSE index over the period since IPO. Elsewhere in Europe, with the exception of Moleskine and Evonik, which are trading below their respective IPO prices, the majority of PE-backed IPOs have held their IPO price since listing and remain generally in line with the market.

The GCC bond market, similar to the previous quarter, saw significant issuances from the Kuwait central bank, which raised a total of $ 6.7 billion from issuances of its treasury bills and long-term government bonds.
The banking sector continued to dominate the corporate bond market with noteworthy issuances by both the UAE- and Qatar-based banks. These included Emirates NBD’s $ 1 billion Tier one capital issue, another $ 1 billion issue by Qatar National Bank under its Euro Medium Term Note (EMTN) program and issuances by National Bank of Abu Dhabi and Commercial Bank of Dubai, which raised $ 465 million and $ 500 million each respectively.

After a quiet first quarter, the Saudi sukuk market was seen to be one of the most active in Q2, 2013 with sizable sukuk issuances on both the corporate and sovereign front. These included sukuk issued by Islamic Development Bank raising total proceeds of $ 1 billion, Saudi Electricity Company and Sadara Chemicals Company each raising $ 2 billion.

Another notable issuance during the quarter is Dana Gas PJSC’s sukuk, which raised $ 850 million and which was issued to refinance its existing debt.

Drake said: "The start of the quarter proved stronger for debt issuances where we saw most of the money being raised. However, toward the end of the quarter, market sentiment declined as the interest rate environment hardened causing some issuers to postpone their issuances.

(Arab News / 10 July 2013)

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Pakistan: Silkbank to spread Islamic banking network

Silkbank officially launched on Monday its Islamic banking division called Emaan Islamic Banking, with plans to create a wide branch network and offer state-of-the-art products, both in retail and consumer banking, backed by latest technology to capitalise on the potential of Islamic banking in Pakistan.

The Emaan Islamic Banking’s branch network now stands at 10 with footprints in eight cities including Karachi, Lahore, Faisalabad, Islamabad, Rawalpindi, Abbottabad, Mardan and Quetta.
The extension of the branch network and availability of 78 online Silkbank branches across the country substantially enhance the reach of Emaan Islamic Banking services, the bank says.
Speaking on the occasion, Adviser to Silkbank Chairman Shaukat Tarin stressed that the Islamic banking division leaves no stone unturned in seizing every opportunity to become a meaningful player in the Islamic financial industry.
“This positive approach is reflected in the expeditious growth of its book size. Adorned with vibrant branding, Emaan Islamic Banking branches are making swift strides to captivate the Islamic banking industry in Pakistan,” he said.
Elaborating on the products and services offered by Emaan Islamic Banking, Silkbank Executive Director MA Mannan said the Islamic banking division offers a complete suite of liability-based products and services to clients.

(The Express Tribune / 08 July 2013)

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Tanzania: Islamic Banking Gaining Popularity

ISLAMIC banking has been cited as a vital financial instrument for promoting incomes of individuals and the nation.
This was said yesterday by Mr Seif Suleiman, the People Bank of Zanzibar (PBZ) Marketing Manager during the 37th Dar es Salaam International Trade Fair (DITF).
"Demand for Islamic banking has continuously grown even exceeding supplies thus calling for increased investments of the services," he said. He noted that the introduction of Islamic Banking in the Tanzanian market is aimed at ensuring that PBZ offers products which appeal to all Tanzanians regardless of their faith or background.
The service is being managed in line with the clear guidelines of Shari'ah laws on management of money, one of these guidelines being the absence of interest on current and savings accounts.
"The Shari'ah Law forbids the earning of interest, funds deposited in the accounts will be invested in businesses that are approved under Shari'ah Law," he insisted.
Mr Suleiman said although the service will mostly appeal to our Muslim clientele, it is completely open to everyone regardless of their faith. Islamic banking services will be available to all who choose an alternative to conventional banking. "Muslims and non-Muslims globally are choosing to make use of Islamic Banking," he added.
All investments made under Islamic banking are never associated with any of the traditional "in" industries, such as alcohol, tobacco, gambling or pornography; as a result the product stands on an individual's faith, ensuring not only financial security but also moral and mental satisfaction.
For example, PBZ provides interest free loans to business people for wholesale purchase of goods for retail selling and the bank adds certain amount as charges to the money lent. Wholly owned by the Zanzibar government, PBZ is one of the oldest commercial Banks in the country.
(Allafrica / 09 July 2013)

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