x Abu Dhabi, UAESaturday 20 January 2018

Wataniya share offering shows return of appetite

Abu Dhabi insurer Wataniya's IPO was oversubscribed by 7 times as investor apetite for share sale returned to the UAE, a company official said.

The initial public offering of shares in Wataniya, an Islamic insurer, has been oversubscribed by seven times amid improving appetite for share sales in the Emirates.

At the close of the initial public offering (IPO), applications for 590 million shares were received for the 82.5 million shares available. The founders of Wataniya subscribed to 45 per cent of the total share capital of Dh150 million (US$40.8m).

"The subscription levels we received is a strong indication that there is liquidity and cash available, that we are in a good market and a strong economy," said Aref al Khouri, the chairman of the founder's committee of Wataniya.

The Dh82.5m IPO was launched on April 18 and closed on Sunday. The company will list shares on the Abu Dhabi Securities Exchange (ADX) within two months pending regulatory approval from the Emirates Securities and Commodities Authority (SCA), the UAE Insurance Authority and the Central Bank.

Bankers involved in the IPO said the success was largely down to the type of investors targeted.

"Considering the current market conditions, we had to reach out to a different kind of investor base than offerings in the past," said Majd Maaitah, the head of securities at National Bank of Abu Dhabi (NBAD). The Abu Dhabi lender is acting as the adviser, lead manager and receiving bank for the offering.

"While previous IPO participants were mostly retail investors, subscribers to Wataniya were mostly institutional investors from regional banks and investment banks who have fresh cash available to build up positions as valuations for equities in the UAE remain cheap," Mr Maaitah said.

The gross contributions of Islamic insurance, known as takaful in the UAE, are projected to grow at an annual rate of 30 per cent between last year and 2014, outpacing the growth in the overall insurance sector, Mr al Khouri said.

Wataniya's founding shareholders include Abu Dhabi National Islamic Finance - a subsidiary of NBAD - Abu Dhabi National Insurance, Abu Dhabi National Energy and Aldar Properties.

The result comes as other companies have delayed listings in light of unfavourable market conditions.

Oman's Renaissance Services in late March delayed the planned $500m London listing of its unit Topaz Energy and Marine. Axiom Telecom, a UAE mobile phone distributor, in December cancelled plans to list on Nasdaq Dubai.

Insurance House's Dh66m IPO in February just scraped by, ending a two-year drought of public offerings in the UAE. In the past two years, the Dubai Financial Market General Index has fallen 72 per cent and the ADX General Index 46.7 per cent.

"It is apparent that reasonable-sized IPOs are the way forward. This is what we need today to encourage participation of many investors and bring liquidity to the markets," said Mohammed Ali Yasin, the chief investment officer at CAPM Investment in Abu Dhabi.

"With that in mind, this is a good opportunity for SCA to consider bringing down the minimum float of 55 per cent, according to current regulations, in order to encourage further activity."