IPO season is back in Abu Dhabi

Abu Dhabi stock exchange says two companies may IPO by the end of the year, the first since 2011 as economy turns the corner.

Rashed Al Baloushi, the chief executive of Abu Dhabi Securities Exchange, expects the first government bond to be listed on the exchange before the end of the year. Delores Johnson / The National

The Abu Dhabi Securities Exchange expects two companies to list shares on the stock market by the end of the year, in what would be the first initial public offering in the emirate after a three-year hiatus. The public sale of shares would come amid a stock market rally that has erased losses suffered after the global financial crisis of 2008, and a resurgence of the UAE economy.

"Normally the IPO process starts with the regulation and after they get the approval from the authority, they come back to the stock market," said Rashed Al Baloushi, ADX's chief executive. "We, as a stock market, are co-operating with other companies that we know are going to go public – and there are some in the pipeline – and we expect a couple to be launched and listed on the ADX very soon before the end of this year. We are talking to four companies about IPOs. Two of them are in the last stage of the pipeline and will list this year."

Mr Al Baloushi, who declined to name the companies or industries that they operate in, also said he expected the first government bond to be listed on the exchange before the end of the year, and that several other private businesses may list shares on the exchange without initially selling shares to the public.

While there has been much talk of IPOs in the past year-and-a-half as the economy improves, most companies that have taken the plunge have done so on the London stock exchange to avoid rules that force companies to sell at least a 55 per cent stake to investors. A notable exception is Emaar’s upcoming IPO of its malls unit, in which the company received an exemption from the regulator to sell only a 15 per cent stake on Dubai’s main exchange. The Abu Dhabi-based Gulf Marine Services listed its shares in London in March, while shares of the Dubai-based real estate developer Damac started trading on the same exchange in December. National Takaful was the last company that floated its shares on the Abu Dhabi exchange in November 2011.

Since UAE stocks were upgraded to MSCI emerging-market status earlier this year, the number of new investors signing up with the exchange has jumped to more than 14,000. That is a considerable gain from the previous year, Mr Al Baloushi said, without giving a precise comparable figure. He said, however, that new foreign institutional investors opening accounts advanced to 790 from 381 last year amid a 20 per cent gain in the benchmark ADX General Index this year. Last year the gauge gained 63 per cent.

Mr Al Baloushi said his team was seeking to attract more companies to list on the Abu Dhabi exchange, especially private businesses in industries such as petrochemicals, education, health care and retail because those businesses were not directly represented by the stocks on the exchange. “We are working very closely with the owners of those companies to persuade them to go public and have discussed the challenges that they are facing,” said Mr Al Baloushi. “If we do that, we will have an exchange that reflects the economy. We are talking about an economy that will have more than US$100 billion of infrastructure investments through 2017. We are talking about huge expansion in infrastructure and into the country itself. That should be reflected in the stock market.”

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