A UAE currency exchange company could become the first such business to IPO in the region.
UAE Exchange plans float in Dubai
An Abu Dhabi conglomerate is hoping to spin off the country's largest remittance house, UAE Exchange, into a separate company and sell its shares to the public.
New Medical Centre (NMC) Group plans to hold an initial public offering (IPO) for UAE Exchange within two years, said BR Shetty, the group's chief executive. If UAE Exchange sells shares, it would be the only publicly traded remittance company in the region.
Foreign workers in the UAE remitted an estimated Dh120 billion (US$32.67bn) last year.
The IPO is part of the group's expansion plans, which Mr Shetty said were increasingly reliant on outside financing. "Until now, my sweat was the capital," he said recently.
This month, the group sold a 40 per cent stake worth $1.2bn in its healthcare business to the private-equity company Centurion Investment. The money from that stake sale is to be used for hospital acquisitions in the Mena region and expansion into India.
The group's healthcare unit also refinanced Dh475 million of debt after what Mr Shetty termed a cash-flow "crisis". The decision to list UAE Exchange was unrelated to that event, he said.
Mr Shetty said he would like to sell 40 per cent of the UAE Exchange and list it on Nasdaq Dubai, but bankers had not yet been hired to consult on the offering.
UAE Exchange, which was founded in 1980, has more than 500 offices in 22 countries on five continents. The company provides services such as global bank transfers and instant money transfers to a customer base of about 3.5 million. The capital from the IPO would enable the company to increase its presence in Africa and Europe.
Mr Shetty said he considered spinning off UAE Exchange in 2007 but concluded that market conditions were not favourable. UAE markets have suffered from poor liquidity in the past year, but Mr Shetty said he expected conditions to improve in the coming year.
"I believe markets will turn around and I believe in the UAE economy," he said.
NMC Group also applied for a banking licence from the central bank of India almost four years ago. "We want UAE Exchange to transform into a bank," Mr Shetty said. "It makes sense organically, as the only way to grow from a financial services company."
Saudi Arabia's Al Rajhi Bank is the only example in the Gulf of an exchange house converting into a bank.
"The business line has been very attractive, given the nature of the remittance and foreign exchange business," said Walid Shihabi, the head of Shuaa Securities in Abu Dhabi.
Mohammed Ali Yassin, the chief investment officer at CAPM Investment in Abu Dhabi, said retail investors were likely to be interested in UAE Exchange shares because they were familiar with the brand.
NMC Group also owns restaurants, jewellery shops, property and pharmaceutical plants.