The return of the Gulf IPO…

The return of the Gulf IPO…

An increase in IPO activity marks the turn of the tide for the UAE market but it also highlights the need for a review of the country’s financial regulations says Eva Fernandes.

September 17, 2012 11:53 by Eva Fernandes

There can be little doubt concerning the improved health of the IPO market in the MENA region. According to research from Ernst & Young companies in the region raised more than $1.37 billion in the first six months through IPOs, a marked improvement to the $396.47 million raised during the same period, last year. In fact, last year Nasdaq Dubai reported Dh15.7 million in losses. The gloom seemed to spill over to the beginning of this year, what with Damas delisting from Nasdaq Dubai this June, there were only two compnaies listed on the exchange.

This quarter has seen a revival in IPO-related news in the region. For one thing Paris Gallery has announced a potential listing with either the Dubai Financial Market and sister bourse Nasdaq Dubai. Calling it a ‘safety net’ Paris Gallery CEO Mohammad Al Fahim has refused to comment on the value or stake the company is likely to float.

The Habtoor Group, which has operations in automotives, real estate, construction and hospitality, has announced plans to list on Dubai Nasdaq early next March with hopes to raise as much as $1.3 -$1.6 billion. Suggesting floating 25 percent of the company, Khalaf Al Habtoor told Arabian Business the decision to go public has long since been in the pipeline: “We’ve been talking about an IPO for more than 20 years but for some reason or another it hasn’t happened. Now, after several meetings with Nasdaq Dubai and DIFC and the encouragement from financial institutions who are interested in shares, we will go for an IPO.”

But it isn’t just the health of IPO markets here in the Emirates which is seeing a revival. Omani alizz is aiming to raise as much as OMR 400 million with its listing on the Muscat Securities Market. The IPO, which is backed by some local names including Abu Dhabi’s Aabar Investments, Tasameem Real Estate and First Energy Oman, will be open for subscription from the coming Saturday till October 21 selling at OMR 0.102 per share.

Hiring HSBC Holdings, Saudi Arabian Airline’s Saudi Ground Services is planning an IPO for 30 percent of its shares, although banking sources told Reuters the listing wouldn’t happen till early 2013 if not much later. Saudi Arabian Airlines’ other unit Saudi Airlines Catering Co raised a good $347 million this June when it after completed a 30 percent IPO this July.

As the IPO market picks up, perhaps the UAE had no better time to reconsider the regulations and policies of its three stock exchanges. Could it be time for unification within the Emirates, or better yet, a unification of stock markets in the GCC? Perhaps taking steps to improve trading liquidity and inculcating a better investor-relations culture maybe a way to ensure the current change in appetite is maintained.