Qatars capital markets are expected to see limited activity in the coming year, according to Aladdin Hangari, chief executive officer of Credit Suisse Qatar.
I expect to see some [initial public offering] activity from government related entities, but I think there are a still lot of barriers before we will see private sector companies coming to market, he says.
The wait is for a window of opportunity, as the government regulators will be trying to manage the liquidity in the market and want to ensure that there are appropriate time gaps between launching each IPO.
In the coming 6 to 12 months a couple of IPOs are set to launch on Qatar Exchange. Barwa Bank has plans to go public soon, while Qatar First Bank is expected to list some of its existing shares, according to two sources in Qatar.
Qatar Petroleum is understood to be planning IPOs of three to four units in the coming years after its subsidiary Mesaieed Petrochemical Holding Company raised QR3.23bn on 21 January. Including Mesaieed the IPOs will have a total value of QR50bn ($13.73bn).
The launch of the new, QR45bn ($12.4bn) investment firm Doha Global Investment Company, which Credit Suisse is advising on, has been delayed after it was originally scheduled for May last year.
Qatar Holding, the foreign investment arm of the countrys sovereign wealth fund, would transfer $3bn into the funds assets, with a similar amount raised through a Qatar Exchange listing.
We understand that its on hold for the time being and the sponsors will come back to the advisors if they do decide to go ahead with the transaction, says Hangari.
The IPO plans are part of Qatars push to develop a deeper stock market, which struggles to attract liquidity. It is mainly dominated by private wealth and government-related investors.
In January Qatar Central Bank announced that a central securities depository had been formed, part of a plan to upgrade the structure of its financial sector. Qatar is also looking at raising foreign ownership limits on several companies. That could help cater to higher demand resulting from its MSCI upgrade to emerging markets status in May 2014.
The government is trying to coordinate more between its different state entities. They recently set up a state debt management office and are definitely much better aligned in terms of when and how much they borrow from banks and when they plan to come to the capital markets, says Hangari.
On the bond market he does not expect a major increase in corporate activity. Last year Commercial Bank of Qatar and Doha Bank privately sold bonds to pension funds.
I dont expect much more activity this year unless its a bank or a real estate company like Qatari Diar. Several companies are thinking about issuing, but many will need to get a credit rating before we see them going to the international markets. I dont think the government will be keen to issue state guarantees for the companies they own, and investors will always prefer to have an independent credit rating, he says.