The Abu Dhabi-based stock brokerage Al Ramz Securities is considering an initial public offering amid ambitions to turn into a full-fledged on-shore investment bank.
Al Ramz, which ranked No 1 by traded value last month, has appointed an international investment bank and lawyers to prepare due diligence and valuation reports for the company’s board to review.
"Our board is encouraged with the recent increase in market valuations," Mohammad Al Mortada Al Dandashi, the managing director at the stock brokerage told The National yesterday. "They think it should be a public and success story. We want to be able to advise on mergers and acquisitions, IPOs. We have the experience and expertise."
Al Ramz, launched in 1997, has traded shares over the counter long before the federal bourses came into being.
The company has 10 shareholders. Among the most notable are the Abu Dhabi government-owned investment vehicle InvestAD, which holds a 20 per cent stake, and Mr Al Dandashi, who holds an 18 per cent stake.
“The plan is if it all goes ahead, we would like to go public by the first quarter of next year. The reason is because we think this year in terms of trading will be good for profits and add a lot of value to the valuation,” Mr Al Dandashi said.
Data show that the brokerage in April traded Dh7.25 billion worth of shares on the Abu Dhabi Securities Exchange and Dh9.38bn worth of shares on the Dubai Financial Market (DFM).
Al Ramz made a full-year profit of Dh49.88 million in 2013, versus a loss of Dh2.68m in 2012. Net commission income from last year stood at Dh85.52m, compared with Dh15.37m a year earlier.
Brokers say a move to publicly listed companies should be a natural step forward.
“I like the idea,” said Nabil Farhat, a partner at Al Fajer Securities, a stock brokerage in Abu Dhabi. “In Oman, all brokerage firms are public. It brings consolidation, access to capital, transparency and public exposure.”
Stock brokerages returned to profitability last year for the first time since the 2008 global financial crisis that triggered years of losses, restructuring and consolidation for the industry.
There are 48 companies that are operational today, compared to 103 firms in 2010.
Brokerages, whose bread and butter comes from trading commissions, are finally capitalising on a resurgence in investor interest amid a surge in asset prices and values.
The Abu Dhabi Securities Exchange General Index is up 16.7 per cent since January, while the Dubai Financial Market General Index is up 54.7 per cent in the same period.
Bigger volumes boosted profits for DFM, the region’s only publicly listed stock exchange, by 696 per cent in the first quarter of this year to Dh215.1m. The bourse reported a net income of Dh27m in the year-earlier period.
Stocks listed on the local bourses are due for inclusion in MSCI's Emerging Market Index next month. A final list of firms to be represented on the international compiler's index are due to be announced on Thursday. In June last year, MSCI upgraded its classification for the UAE and its national exchanges to emerging markets from frontier markets.
halsayegh@thenational.ae
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