Financial storm sinks IPOs



Stormy financial markets have derailed initial public offerings (IPOs), ending the momentum for new listings that was building just months ago, industry officials say. Analysts are observing a gloomy outlook for the IPO market in the short term, as the most popular IPO listings in the past two years have been in the financial services sector in the Gulf. Nine out of 12 IPOs issued this year and 17 last year were in the financial services sector, according to data from Zawya, and included Alinma Bank, the largest IPO on the Saudi's Tadawul exchange, and Ajman Bank on the Dubai Financial Market (DFM). The shares of financial companies have been particularly hard-hit as foreign investors have fled the GCC markets, sending them plummeting. Listing shares in the coming months would be "suicidal", said Karim el Solh, the chief executive of Gulf Capital. He said it could take another 18 months to two years for the IPO market to pick up again. "Why should people invest in IPOs when they can have the best picks of the stock market at bottom valuations?" The total value of IPOs in the GCC for the first nine months of this year was double that of those launched in the same period last year, according to data provided by the news and data provider Zawya. Up until the end of September, IPOs were worth US$11.67 billion (Dh42.86bn), whereas last year they totalled $5.9bn.

Saudi IPOs dominate the list, but fell this year to 13 from 20 last year. However, the listings were much bigger this year, nearly three times the value of those the previous year. But while the 2008 figures appear to be impressive, they cover an economic period during which the stock markets were high and property markets were booming. Now, with collapsing equities, pressure on local banks and a housing market that appears to have peaked, the IPO pipeline seems to have fizzled out. There were none in the GCC in the past month, with a mere four in the pipeline, according to Zawya.

The fall-off in listings has taken a toll on financial firms that take fees from organising and selling new share offerings. Shuaa Capital, a UAE-based financial services firm that ranked number two lead manager on IPO deals in the GCC last year, said that IPO delays contributed to the firm's losses posted in the earnings report this year, said Oliver Schutzmann, the firm's spokesperson. The firm registered a net loss of Dh371.1 million for the six months ending on Sept 30. "The delay of IPOs has affected Shuaa's investment banking business," said Mr Schutzmann.

The firm has seen several of the IPOs where it had mandates delayed, including Al Qudra Holdings in March and two more IPOs that were meant to be announced earlier this month, but which have been shelved for now. Shuaa's earnings report stated that the firm's results were primarily impacted by the global market downturn, which had specifically affected the principle investments business "where a number of major capital market transactions have been delayed due to the adverse market conditions".

Also included in the results are losses related to Dh78.6m worth of write-downs on structured products and fixed income securities that were exposed to Lehman Brothers. Yazan Abdeen, an equities portfolio manager at ING Investment Management, said the market needed to stabilise before investor interest in new offerings would return. The DFM had both its biggest one-day rise and its biggest one-day fall in the past two weeks. It has lost about 19 per cent in the past month, and 47 per cent this year. "The market is not in a position to absorb new listings now," Mr Abdeen said.

Mr Solh, however, is optimistic about finding opportunities for private equity in the dried-up IPO market. He believes that many Gulf companies are seeking private equity firms for growth capital at a time when public listings are not advisable and banks have become more strict with lending. "The companies are much more amenable to selling equity and they need to keep going even though banks aren't lending, so they come to us for growth capital - instead of borrowing, they increase their equity through us," he said.

"Before, the IPO market was a competitor to private equity; a lot of families in business said 'why do I need to go through a round of private equity, I'll bypass you and go straight to the public market'. Now, the IPO market is shot." shamdan@thenational.ae afoxwell@thenational.ae

J Street Polling Results

97% of Jewish-Americans are concerned about the rise in anti-Semitism

76% of US Jewish voters believe Donald Trump and his allies in the Republican Party are responsible for a rise in anti-Semitism

74% of American Jews agreed that “Trump and the Maga movement are a threat to Jews in America"

RACE SCHEDULE

All times UAE (+4 GMT)

Friday, September 29
First practice: 7am - 8.30am
Second practice: 11am - 12.30pm

Saturday, September 30
Qualifying: 1pm - 2pm

Sunday, October 1
Race: 11am - 1pm

COMPANY PROFILE

Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
Investors: Bootstrapped with undisclosed funding. Looking to raise funds from outside

Company profile

Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices

Specs

Power train: 4.0-litre twin-turbo V8 and synchronous electric motor
Max power: 800hp
Max torque: 950Nm
Transmission: Eight-speed auto
Battery: 25.7kWh lithium-ion
0-100km/h: 3.4sec
0-200km/h: 11.4sec
Top speed: 312km/h
Max electric-only range: 60km (claimed)
On sale: Q3
Price: From Dh1.2m (estimate)

PREMIER LEAGUE FIXTURES

All times UAE (+4 GMT)

Saturday
West Ham United v Tottenham Hotspur (3.30pm)
Burnley v Huddersfield Town (7pm)
Everton v Bournemouth (7pm)
Manchester City v Crystal Palace (7pm)
Southampton v Manchester United (7pm)
Stoke City v Chelsea (7pm)
Swansea City v Watford (7pm)
Leicester City v Liverpool (8.30pm)

Sunday
Brighton and Hove Albion v Newcastle United (7pm)

Monday
Arsenal v West Bromwich Albion (11pm)

COMPANY PROFILE

Company name: Almouneer
Started: 2017
Founders: Dr Noha Khater and Rania Kadry
Based: Egypt
Number of staff: 120
Investment: Bootstrapped, with support from Insead and Egyptian government, seed round of
$3.6 million led by Global Ventures

Paltan

Producer: JP Films, Zee Studios
Director: JP Dutta
Cast: Jackie Shroff, Sonu Sood, Arjun Rampal, Siddhanth Kapoor, Luv Sinha and Harshvardhan Rane
Rating: 2/5

The specs: 2018 Renault Koleos

Price, base: From Dh77,900
Engine: 2.5L, in-line four-cylinder
Transmission: Continuously variable transmission
Power: 170hp @ 6,000rpm
Torque: 233Nm @ 4,000rpm
Fuel economy, combined: 8.3L / 100km

Kill Bill Volume 1

Director: Quentin Tarantino
Stars: Uma Thurman, David Carradine and Michael Madsen
Rating: 4.5/5

World Cricket League Division 2

In Windhoek, Namibia - Top two teams qualify for the World Cup Qualifier in Zimbabwe, which starts on March 4.

UAE fixtures

Thursday February 8, v Kenya; Friday February 9, v Canada; Sunday February 11, v Nepal; Monday February 12, v Oman; Wednesday February 14, v Namibia; Thursday February 15, final

Sweet Tooth

Creator: Jim Mickle
Starring: Christian Convery, Nonso Anozie, Adeel Akhtar, Stefania LaVie Owen
Rating: 2.5/5

RESULTS

6.30pm: Emirates Holidays Maiden (TB) Dh 82,500 (Dirt) 1,900m
Winner: Lady Snazz, Richard Mullen (jockey), Satish Seemar (trainer).

7.05pm: Arabian Adventures Maiden (TB) Dh 82,500 (D) 1,200m
Winner: Zhou Storm, Connor Beasley, Ali Rashid Al Raihe.

7.40pm: Emirates Skywards Handicap (TB) Dh 82,500 (D) 1,200m
Winner: Rich And Famous, Royston Ffrench, Salem bin Ghadayer.

8.15pm: Emirates Airline Conditions (TB) Dh 120,000 (D) 1,400m
Winner: Rio Angie, Sam Hitchcock, Doug Watson.

8.50pm: Emirates Sky Cargo (TB) Dh 92,500 (D) 1,400m
Winner: Kinver Edge, Richard Mullen, Satish Seemar.

9.15pm: Emirates.com (TB) Dh 95,000 (D) 2,000m
Winner: Firnas, Xavier Ziani, Salem bin Ghadayer.

Company Profile

Name: Raha
Started: 2022
Based: Kuwait/Saudi
Industry: Tech Logistics
Funding: $14 million
Investors: Soor Capital, eWTP Arabia Capital, Aujan Enterprises, Nox Management, Cedar Mundi Ventures
Number of employees: 166

David Haye record

Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4

The specs: 2019 GMC Yukon Denali

Price, base: Dh306,500
Engine: 6.2-litre V8
Transmission: 10-speed automatic
Power: 420hp @ 5,600rpm
Torque: 621Nm @ 4,100rpm​​​​​​​
​​​​​​​Fuel economy, combined: 12.9L / 100km

if you go

The flights

Direct flights from the UAE to the Nepalese capital, Kathmandu, are available with Air Arabia, (www.airarabia.com) Fly Dubai (www.flydubai.com) or Etihad (www.etihad.com) from Dh1,200 return including taxes. The trek described here started from Jomson, but there are many other start and end point variations depending on how you tailor your trek. To get to Jomson from Kathmandu you must first fly to the lake-side resort town of Pokhara with either Buddha Air (www.buddhaair.com) or Yeti Airlines (www.yetiairlines.com). Both charge around US$240 (Dh880) return. From Pokhara there are early morning flights to Jomson with Yeti Airlines or Simrik Airlines (www.simrikairlines.com) for around US$220 (Dh800) return. 

The trek

Restricted area permits (US$500 per person) are required for trekking in the Upper Mustang area. The challenging Meso Kanto pass between Tilcho Lake and Jomson should not be attempted by those without a lot of mountain experience and a good support team. An excellent trekking company with good knowledge of Upper Mustang, the Annaurpuna Circuit and Tilcho Lake area and who can help organise a version of the trek described here is the Nepal-UK run Snow Cat Travel (www.snowcattravel.com). Prices vary widely depending on accommodation types and the level of assistance required. 

COMPANY PROFILE

Name: Xpanceo

Started: 2018

Founders: Roman Axelrod, Valentyn Volkov

Based: Dubai, UAE

Industry: Smart contact lenses, augmented/virtual reality

Funding: $40 million

Investor: Opportunity Venture (Asia)

Sly Cooper and the Thievius Raccoonus

Developer: Sucker Punch Productions
Publisher: Sony Computer Entertainment
Console: PlayStation 2 to 5
Rating: 5/5

Confirmed bouts (more to be added)

Cory Sandhagen v Umar Nurmagomedov
Nick Diaz v Vicente Luque
Michael Chiesa v Tony Ferguson
Deiveson Figueiredo v Marlon Vera
Mackenzie Dern v Loopy Godinez

Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through www.etihadarena.ae and www.ticketmaster.ae.

MATCH INFO

Fixture: Thailand v UAE, Tuesday, 4pm (UAE)

TV: Abu Dhabi Sports

The stats: 2017 Jaguar XJ

Price, base / as tested Dh326,700 / Dh342,700

Engine 3.0L V6

Transmission Eight-speed automatic

Power 340hp @ 6,000pm

Torque 450Nm @ 3,500rpm

Fuel economy, combined 9.1L / 100km

Six pitfalls to avoid when trading company stocks

Following fashion

Investing is cyclical, buying last year's winners often means holding this year's losers.

Losing your balance

You end up with too much exposure to an individual company or sector that has taken your fancy.

Being over active

If you chop and change your portfolio too often, dealing charges will eat up your gains.

Running your losers

Investors hate admitting mistakes and hold onto bad stocks hoping they will come good.

Selling in a panic

If you sell up when the market drops, you have locked yourself out of the recovery.

Timing the market

Even the best investor in the world cannot consistently call market movements.

COMPANY PROFILE

Company name: Co Chocolat

Started: 2017

Founders: Iman and Luchie Suguitan

Based: Dubai, UAE

Industry: Food

Funding: $1 million-plus

Investors: Fahad bin Juma, self-funding, family and friends

SPECS

Engine: 2-litre direct injection turbo
Transmission: 7-speed automatic
Power: 261hp
Torque: 400Nm
Price: From Dh134,999

Company Profile

Name: Nadeera
Based: Abu Dhabi, UAE
Founders: Rabih El Chaar and Reem Khattar
Sector: CleanTech
Total funding: About $1 million
Investors: Hope Ventures, Rasameel Investments and support from accelerator programmes
Number of employees: 12