x Abu Dhabi, UAEMonday 22 January 2018

Rebound in UAE markets sets up IPO pipeline

Senaat, the Abu Dhabi industrial conglomerate is among a number of companies mulling public share sales.

Senaat is said to be considering an IPO. Fatima AL Marzooqi/ The National.
Senaat is said to be considering an IPO. Fatima AL Marzooqi/ The National.

Senaat, the industrial conglomerate, is among a group of UAE companies considering an initial public offering.

The group has been in talks with banks to prepare for a possible share sale as life returns to the UAE's equity markets.

But such a move would be subject to Executive Council approval.

The company formerly known as General Holding Corporation, which holds stakes in companies including Emirates Steel Industries and National Petroleum Construction Company, is a key part of the Abu Dhabi Government's Economic Vision 2030 development plan.

It is now considering a listing on local stock markets, most likely Abu Dhabi's, according to four people familiar with the matter.

One said that the company had put out requests for banks to arrange the deal more than a year ago and had already mandated leads.

Dana Gas, Al Noor Hospital, Abu Dhabi National Energy Company - also known as Taqa - and RAK Petroleum are all understood to be considering whether to tap capital markets with new share sales, some of which could take place on the London Stock Exchange to access international liquidity.

In an interview last month, Hussain Jasim Al Nowais, the chairman of Senaat, said that the option of listing the company or one of its units "has always been there for us".

He said: "We do it when the market is right, we do it when the company is right, when it ticks all the boxes we do it."

The deal is understood to be a work in progress which will most likely involve Senaat rather than one of its units. The conglomerate reported revenues of Dh12.3 billion during last year, representing a 7.8 per cent increase compared with the previous year. Net profits were Dh1.3bn, a decrease of 13.3 per cent during the same period.

The company already owns stakes in the publicly traded companies Arkan Building Materials and Agthia, the foodstuffs company best known for Al Ain Mineral Water.

The possible listing comes as the UAE's stock exchanges, for so long suffering from poor liquidity and lack of interest following the global financial crisis, rebound to be among the best performing worldwide.

In September, the President, Sheikh Khalifa, issued a law transferring full ownership of Senaat - then known as General Holding Corporation - to the government of Abu Dhabi. The law said that the company's "shares will not be allowed to be sold, mortgaged or be within any transaction scheme, or given up without a decision from the Executive Council," WAM reported.

The Dubai Financial Market General Index has risen 43.2 per cent so far this year, closely followed by the Abu Dhabi Securities Exchange, up 33.1 per cent during the same period.

"IPOs are coming back, mark my words," said one senior investment banker, who asked not to be identified.

Both Abu Dhabi and Dubai's onshore markets are expected to receive new listings during the year ahead, the banker added.

No listings have taken place on the UAE's domestic exchanges since 2011, although the UAE's NMC Health listed on the London Stock Exchange and Dubai-based Amira Nature Foods listed on the New York Stock Exchange last year.

"We continue to see successful regional management teams coming to us to discuss their potential IPO options, both in the region and internationally. There is a noticeable increase as compared to last year," said Declan Hayes, the regional managing director at Deloitte Corporate Finance.

"There is an encouraging number of corporates looking to raise equity capital on international stock exchanges, such as London and Singapore, both due to their equity story and the interest that the Middle East region is attracting from both western and Far Eastern investors," he added.

It is a far cry from a few years ago, when investment bankers from institutions including Nomura, Deutsche Bank and Morgan Stanley cut staff numbers and withdrew from the UAE to London amid a dearth of deals.

There are just four weeks to go until the index provider MSCI reveals whether or not it will upgrade the UAE and Qatar to "emerging market" status, considered the A-list of growth economies and including heavyweights such as China, India and Brazil.

The two countries have missed out on inclusion five times since 2009, but bankers are optimistic this year that exchange officials have done enough to convince institutional investors that the UAE merits reclassification - bringing with it a surge in fresh liquidity.