Exclusive: Amanat may seek listing of portfolio companies in next two to four years

The portfolio companies of Amanat Holdings, a Dubai-based investment firm, are getting closer to being ready for initial public offerings (IPOs) and may seek listings on regional stock exchanges within two to four years, its chairman said.

"The way we see things now for these companies, they are anywhere between two years to four years in terms of their IPO readiness," Faisal Bin Juma Belhoul, told The National in a joint interview with the company's chief executive, Khaldoun Haj Hassan, in Dubai. "If you are not IPO-ready, then you may never catch that market [listing] opportunity so we work towards that. We have candidates that are very close to that point [IPO readiness]".

A decision to where to list the companies will depend on the nature of the business, the market and investors’ appetite at the time of listing, Mr Belhoul said. “But the way we see it right now, it will be regional exchanges” – Dubai Financial Market, Abu Dhabi Securities Exchange or Tadawul in Saudi Arabia, he noted.

IPO activity has remained subdued in the past two years on Arabian Gulf bourses as falling oil prices and slowing economies dented investor appetite. GCC markets held three IPOs in the second quarter of 2017 compared with two in the same period a year earlier with proceeds decreasing 38 per cent from the first half of 2016, according to PwC.

Still, the equities capital markets activity, is expected to get a boost with Saudi Arabia, Opec’s biggest oil producer, planning to bring some of the state-controlled firms including Aramco to the market, in what could be the biggest public offering in the history.

In the UAE, Emaar Properties, the top-listed developer in the country plans to float shares in its real estate development unit and the state-controlled Abu Dhabi National Oil Company, may sell a stake to the public in its Adnoc Distribution unit, which includes more than 300 service stations throughout the UAE.

Dubai-listed Amanat, which specialises in investments in healthcare and education sectors, currently has three portfolio companies -- International Medical Center, a 300-bed multi-disciplinary hospital that serves Saudi Arabia’s oil-rich Western Region; Taaleem Holdings, a UAE-based operator of primary and secondary educational institutions, and Sukoon International Holding, an extended healthcare facility based in Jeddah. The company has so far made one exit when it last year sold its stake in in Abu Dhabi-based Al Noor Hospitals.

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Amanat, Mr Belhoul however said, is unique in its investment philosophy with its long term capital commitments without the pressure of exits which really differentiates it from a typical private equity company.

“This is what we do with these companies – we have an IPO plan for them, irrespective of whether we press the button on it or not -- it is effectively a transformation for these companies. Every company we invest in we have a plan to add to its growth story,” he said. “This means returns for Amanat as well.”

As its portfolio continues to mature, Amanat is looking to invest its entire Dh2.5bn capital before the end of 2018, pursuing more acquisitions in the UAE and Saudi Arabia. It will invest Dh1bn within the fourth quarter of 2017 on “more than one deal” in both health and education sectors, Mr Belhoul said.

“Based on how we are going on right now, the equity part should be fully deployed by the end of next year,” he said. “We believe that is consistent with the deal flow that we are seeing. We remain very comfortable with the targets we have set.”

The company has already invested more than Dh730 million on acquisitions, about 29 per cent of its total capital. Once all the equity is deployed, the firm plans to look at alternative sources of funding, including securing loans, tapping markets with bond issues and equity capital market funding solutions, Mr Belhoul said.

“We will start exploring the funding options in 2018 to ensure that we have sufficient options on the table when we need them,” he added.

Amanat, which was among the biggest non-Saudi companies to invest in the kingdom in 2017 is lining up to capitalise on opportunities arising out of the Saudi Arabia’s privatisation drive, Mr Hassan noted. The company has a healthy pipeline of investment opportunities and some may materialise in the near future, he said.

“We have a very close relationship with the government in Saudi Arabia,” he said. “We believe that our message is very clear to the decision makers that this partnership is becoming closer and we can play a key part in the privatisation.”

The company, he said, has performed within the strategy parameters set at the beginning and the current economic scenario is opening up more investment opportunities for the firm, which has been in operations form more than two years.

“Timing today could not have been any better for Amanat. Today, we are seeing deals which if created 10 years back, we would not have seen,” Mr Hassan said. “Our liquidity, the team and the environment are perfect.”