Abu Dhabi's International Holding Company (IHC) is planning to list its subsidiary, Multiply Group, a holding company that invests in tech-focused scalable businesses, on the emirate's main stock market this year, its chief executive told Reuters.
The planned transaction, in which 30 per cent of Multiply's shares will be offered, could value Multiply at Dh8 billion to Dh10bn ($2.2bn-$2.7bn) and would be the latest in a series of listings and deals for IHC, which became Abu Dhabi's most valuable listed company following the listing of its Alpha Dhabi unit in June and currently has a market capitalisation of over Dh267bn.
“Definitely one of the reasons [for the listing] is market conditions ... but our long-term strategy is to list every single entity which we invest into in the market eventually," said Syed Basar Shueb, chief executive of IHC. "We’re planning the listing before the end of the year, it’s going to be an IPO, a main market listing."
IHC's move continues the string of listings on the Abu Dhabi Securities Exchange (ADX) as companies take advantage of a resurgence in the stock market and investors snap up shares in high-growth sectors. The ADX is the Gulf's best-performing bourse in 2021 and is up almost 54 per cent year to date.
IHC is also eyeing an IPO for its majority-owned healthcare company, Pure Health, which could happen in March 2022, Mr Shueb said. It recently sold a 50 per cent stake in another of its units, asset management group Eltizam, to Abu Dhabi holding company ADQ, and a listing is also possible next year, he said.
Mr Shueb said that IHC is looking into overseas acquisitions, including assets in Turkey's food processing facilities and healthcare sector, with discussions at an "early stage".
This week, Multiply signed a merger agreement with Ben Suhail Group to create a beauty sector joint venture in the UAE. The merged entity Omorfia Group will be 51 per cent owned by Multiply unit MG Wellness Holding, and 49 per cent by another shareholder. Under the partnership all salons and spas will retain their individual brand identities and continue operations and services as usual, IHC said.
Definitely one of the reasons [for the listing] is market conditions ... but our long-term strategy is to list every single entity which we invest into in the market eventually
Syed Basar Shueb,
chief executive of IHC
Last week, Adnoc Drilling made a strong debut on the ADX, following a successful IPO the previous week. The drilling arm of Abu Dhabi National Oil Company (Adnoc) raised $1.1bn from the IPO after it offered 11 per cent of the company’s shares.
On October 5, Fertiglobe, which is 42 per cent owned by Adnoc, announced plans to list on the ADX. It may raise as much as $827 million after the company priced its shares on Wednesday between Dh2.45 and Dh2.65, implying an equity valuation of $5.5bn to $6bn. Fertiglobe is the world’s largest seaborne exporter of urea and ammonia combined, and the Middle East and North Africa’s largest producer of nitrogen fertilisers by production capacity.
Also this week, Abu Dhabi launched a Dh5bn IPO Fund to encourage private companies to list on the stock market. The fund, which will be overseen by the Supreme Council for Financial and Economic Affairs and managed by the Abu Dhabi Department of Economic Development, will invest in five to 10 private companies a year, with a special focus on small and medium enterprises.
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At a glance
Fixtures All matches start at 9.30am, at ICC Academy, Dubai. Admission is free
Thursday UAE v Ireland; Saturday UAE v Ireland; Jan 21 UAE v Scotland; Jan 23 UAE v Scotland
UAE squad Rohan Mustafa (c), Ashfaq Ahmed, Ghulam Shabber, Rameez Shahzad, Mohammed Boota, Mohammed Usman, Adnan Mufti, Shaiman Anwar, Ahmed Raza, Imran Haider, Qadeer Ahmed, Mohammed Naveed, Amir Hayat, Zahoor Khan
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
