Abu Dhabi Securities Exchange, the Arab world's second largest bourse by market capitalisation, is ready for an initial public offering if its stakeholders decide to sell a stake, said the chief executive.
"That's the decision for the stakeholders," Rashed Al Baloushi told The National at the Abu Dhabi Global Market's inaugural Belt and Road financial summit in Beijing this past weekend. "Once the decision is taken, that's what's [going to] make the big difference to the stock exchange," he said.
Stock exchanges are among assets lined up for public listings as GCC states look to privatise some of the state-owned entities to raise capital in a bid to offset the impact of lower oil revenues. The Kuwait bourse is the latest among regional exchanges to have announced an intention for an IPO in the first quarter of 2019.
Saudi Arabia plans to float shares of its stock exchange too. Oman also intends to privatise the Muscat Securities Market. The sultanate plans to create a holding company under the State General Reserve Fund that will assume ownership of the bourse. To date, the Dubai Financial Market is the only listed exchange in the GCC.
The Abu Dhabi government-owned ADX, with about $136 billion in market capitalisation, has yet to discuss the IPO at its board level, but it is ready and "on it" if the government decides to make it a public company, Mr Al Baloushi said.
ADX, aims to be the "market of choice" for listings in the region and is speaking with a host of government entities and private sector companies for potential IPOs. The public float of Adnoc Distribution on ADX in December, the first on the exchange in more than six years was "a big success" for ADX and is encouraging other companies to follow suit.
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A few companies "have already done their due diligence and they are just waiting to finalise the homework they are doing. It's just a matter of them [saying] we are ready," he said. "Even those who need more time have started their homework," he added, without saying how many are in the pipeline.
ADX’s, which has about 966,000 registered investors, 40 per cent of which are from outside the UAE, is targeting companies from four sectors: petrochemicals, health care, education and retail.
“If we have companies from those sectors we will have a market that will be able to reflect the real economy as these sectors are missing [from the market] today,” he said.
Market consolidation among industry players in the UAE will invariably bring depth to the overall market in the future.
The UAE has seen a wave of reorganisation and consolidation of state-controlled businesses; for instance the merger that created First Abu Dhabi Bank, the consolidation of Mubadala and Ipic, the
reorganisation of Abu Dhabi National Oil Company and listing of its retail subsidiary on ADX.
Abu Dhabi and Dubai have also started working closely in the real estate sector with Aldar Properties, the biggest publicly-traded developer on ADX, partnering in March with Dubai's Emaar Properties to pursue a project pipeline worth Dh30bn in both emirates.
