There are dozens of companies in the region itching to go public and the first trickle could start to come to the market by the end of the year.
The demand for initial public offerings (IPOs) has been anaemic this year with only nine offerings throughout the GCC, eight of which were in Saudi Arabia. But analysts say there is no shortage of companies with strong fundamentals who hope the nascent global recovery will mark a return to more favourable conditions in the capital markets.
"What we are seeing and the entities we are working with, we are predicting that opportunity could be as early as late this year or first quarter of next year," said Steve Drake, the head of Middle East capital markets at the consultancy PricewaterhouseCoopers.
Part of Mr Drake's reasoning for recovery in the IPO market is the "faster than expected pick-up in the public debt market" in the region after the global financial crisis.
"There has been a lot of activity in the regional public debt market and what you generally see is a lag of six months between debt markets and equity market pick-up. I think it is a contributing factor here as well," he said.
Istikhlaf Bank of Bahrain is one of the largest announced IPOs next year, with the lender hoping to raise US$3.5 billion (Dh12.85bn). From the UAE, the postal and courier services company Emirates Post has said it wants to raise $272 million by offering a 40 per cent equity stake to the public later in the year, while the food and dairy products company Al Rawabi is looking to raise $435m by offering a 55 per cent stake.
None of these companies has fixed a date for an IPO, according to the business information company Zawya.com data. And while the companies have announced their desire to go public, they will wait until they have a fair valuation of their shares.
So far this year, almost all IPO activity has been confined to Saudi Arabia, home to the GCC's biggest economy and stock exchange. The other offering was in Qatar, where Mazaya Qatar Real Estate Development Company raised $144m in the first quarter.
Still, the eight IPOs during the first half of the year - the ninth took place in the present quarter - raised a total of only $830m, a drop of 31.4 per cent from $1.2bn raised during the first half last year.
The largest by the end of the first half this year was Knowledge Economic City, raising $272m, equivalent to more than 32 per cent of the total capital raised in the entire region. The telecommunications operator Vodafone alone had raised $952m in the first quarter of last year in Qatar.
There has been only one IPO this quarter, in which Saudi Arabia's Al Jouf Cement Company offered 50 per cent of its stake to the public and raised $173.3m.
The next wave of IPOs will also be dominated by Saudi companies but some UAE firms could join the party as well, said Mr Drake.
The problem is that both the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) are seeing minimal institutional investment and a chronic lack of retail liquidity. They are the two biggest losers since the start of this year among the regional peers, with DFM dropping 16.1 per cent and the ADX retreating 7.2 per cent. The Saudi bourse, on the other hand, has gained overall so far this year and yesterday closed up by 3.3 per cent at 6,326.03.
There was some excitement in May when Sameer al Ansari, the chief executive of Shuaa Capital, the biggest investment bank in the country, said the company would manage a Dh1bn IPO in Abu Dhabi the following month. He did not name the company but the announcement at that time was considered a final ice-breaker for the IPO market in the UAE, which has not seen a public floatation since July 2008 when Drake & Scull International raised $332.6m.
According to Mr al Ansari, his bank has three signed mandates for public offerings but market volatility stemming from the Greek debt crisis and talk of a double-dip recession has put those plans on hold.
The other positive announcement this year came from the DFM-listed Dubai Investments, which said it would float part of its private equity arm M'Sharie on NASDAQ Dubai. That also is not expected to happen before the end of the first half of the next year.
Yazan Abdeen, a fund manager at ING Investment in Dubai, expects low valuations and a persistent lack of risk appetite for equities to keep buyout firms and family businesses on the sidelines for the next few months.
"I don't really see any reasons why there should be any IPO activity in the UAE during the second half unless there are fundamental changes," said Mr Abdeen.
"A family which has spent 20 or 30 years building a business can wait a little longer to exit. They are not in a hurry and the same goes for the private equity as they would want to exit at the right price."
But Mr Drake argues that with name-lending coming under tighter scrutiny across the region, family-owned companies are increasingly looking at the equity markets as an option to raise capital.
"With family businesses there are two things: they are at the life cycle of maturity and owners see markets as a good way of realising value, also they need to continue to grow and raise business capital," he said.
In the medium term, the IPO market will be further strengthened by increasing interest from the regional governments to privatise public-sector entities, Mr Drake said. He pointed out that there was interest in going public from private operators in the telecoms, healthcare, retail, tourism and education sectors.
skhan@thenational.ae
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Four motivational quotes from Alicia's Dubai talk
“The only thing we need is to know that we have faith. Faith and hope in our own dreams. The belief that, when we keep going we’re going to find our way. That’s all we got.”
“Sometimes we try so hard to keep things inside. We try so hard to pretend it’s not really bothering us. In some ways, that hurts us more. You don’t realise how dishonest you are with yourself sometimes, but I realised that if I spoke it, I could let it go.”
“One good thing is to know you’re not the only one going through it. You’re not the only one trying to find your way, trying to find yourself, trying to find amazing energy, trying to find a light. Show all of yourself. Show every nuance. All of your magic. All of your colours. Be true to that. You can be unafraid.”
“It’s time to stop holding back. It’s time to do it on your terms. It’s time to shine in the most unbelievable way. It’s time to let go of negativity and find your tribe, find those people that lift you up, because everybody else is just in your way.”
TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
The specs: 2018 Mercedes-Benz E 300 Cabriolet
Price, base / as tested: Dh275,250 / Dh328,465
Engine: 2.0-litre four-cylinder
Power: 245hp @ 5,500rpm
Torque: 370Nm @ 1,300rpm
Transmission: Nine-speed automatic
Fuel consumption, combined: 7.0L / 100km
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
SPECS
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.4-litre%204-cylinder%20turbo%20hybrid%0D%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20366hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E550Nm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ESix-speed%20auto%0D%3Cbr%3E%3Cstrong%3EPrice%3A%3C%2Fstrong%3E%20From%20Dh360%2C000%0D%3Cbr%3E%3Cstrong%3EAvailable%3A%20%3C%2Fstrong%3ENow%0D%3C%2Fp%3E%0A
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
COMPANY%20PROFILE
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From Conquest to Deportation
Jeronim Perovic, Hurst
Company%20profile
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
2018 ICC World Twenty20 Asian Western Sub Regional Qualifier
Event info: The tournament in Kuwait this month is the first phase of the qualifying process for sides from Asia for the 2020 World T20 in Australia. The UAE must finish within the top three teams out of the six at the competition to advance to the Asia regional finals. Success at regional finals would mean progression to the World T20 Qualifier.
UAE’s fixtures: Fri Apr 20, UAE v Qatar; Sat Apr 21, UAE v Saudi Arabia; Mon Apr 23, UAE v Bahrain; Tue Apr 24, UAE v Maldives; Thu Apr 26, UAE v Kuwait
World T20 2020 Qualifying process:
- Sixteen teams will play at the World T20 in two years’ time.
- Australia have already qualified as hosts
- Nine places are available to the top nine ranked sides in the ICC’s T20i standings, not including Australia, on Dec 31, 2018.
- The final six teams will be decided by a 14-team World T20 Qualifier.
World T20 standings: 1 Pakistan; 2 Australia; 3 India; 4 New Zealand; 5 England; 6 South Africa; 7 West Indies; 8 Sri Lanka; 9 Afghanistan; 10 Bangladesh; 11 Scotland; 12 Zimbabwe; 13 UAE; 14 Netherlands; 15 Hong Kong; 16 Papua New Guinea; 17 Oman; 18 Ireland
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
