Alef Education shares slump on ADX trading debut

Drop in stock is in sharp contrast to strong investor demand company received for its IPO

The bell ringing ceremony as Alef Education is listed on the Abu Dhabi Securities Exchange. Photo: Alef Education

Shares in Alef Education, a UAE-based education technology company, slumped on the first day of its trading on the Abu Dhabi Securities Exchange, on Wednesday, bucking the trend of trading debut surges recorded in recent listings on the UAE equities markets.

The stock, which opened flat, dropped by Dh1.11 ($0.3022) per share, or almost 18 per cent, during early trading, compared with its initial public offering price of Dh1.35.

It recovered some ground and closed 12.6 per cent lower at Dh1.18 per share. Trading under the symbol “ALEFEDT”, it was the biggest loser on the ADX and the most traded stock on the bourse on Wednesday.

This drop in the company’s shares contrasts with strong demand for new listings on the UAE bourses.

Shares of Agility Global, a unit of regional logistics major Agility, nearly quadrupled in value after the company began trading on the ADX on May 2.

The drop is also in contrast to the sharp demand for the IPO, in which, Tech Nova Investment and Kryptonite Investments, the selling shareholders, offered 1.4 billion shares, or 20 per cent of the company's issued share capital.

Alef raised Dh1.89 billion after the IPO priced at the top of the range, implying a market capitalisation of Dh9.45 billion at open.

The public offering to retail and institutional investors was 39 times subscribed by investors receiving $20 billion in order, the company said on Wednesday.

“The robust demand for shares of Alef Education is a vote of confidence in the company’s strong fundamentals and attractive growth prospects,” Geoffrey Alphonso, chief executive of Alef Education, said.

“The group’s robust financial position and capacity to raise capital position it well to take advantage of growth opportunities and continue maximising shareholder value.”

For the financial years ending December 31, 2024 and 2025, Alef intends to pay a target minimum dividend amount to investors equivalent to an annualised dividend of Dh135 million for each year, the company said.

Alef is indirectly majority owned by Abu Dhabi Capital Group, a private institutional investment company that has a multi-asset class portfolio across the Mena region.

The company provides artificial intelligence-powered learning and digital education resources to schools in the UAE, Jordan, Indonesia, Morocco and the US.

Its platform serves about 7,000 schools, with about 1.1 million registered students and 50,000 teachers.

The company is pursuing both organic and inorganic growth strategies and looking to expand in markets closer to home, Mr Alphonso said last month.

“We have categorised the focus for the firm over the next few years … close to the home market, which, we feel, are around the neighbouring GCC,” he said at the time.

“We put boots on the ground in Saudi [Arabia], we've had some great interaction in Qatar [and] there's still a lot of work to do here in the UAE.”

The company is also open to accretive acquisition and has a robust mergers and acquisitions pipeline, he said at the time.

“We do have plans to close one to two, accretive M&A this year, which will complement the business and help us fulfil our growth ambitions,” he added.