Massar considering Dh1 billion Abu Dhabi IPO next year

The flotation is being seen in financial circles as a sign of confidence in local capital markets, which have been hit by volatility in recent weeks on the back of falling crude oil prices in the world markets.

Vehicle management business Massar is considering a Dh1bn initial public offering which would be Abu Dhabi’s first share sale in the current wave of new listings.

The company is eyeing an IPO early next year on the Abu Dhabi Securities Exchange (ADX), according to people familiar with the situation.

The flotation is being seen in financial circles as a sign of confidence in local capital markets, which have been hit by volatility in recent weeks on the back of falling crude oil prices in the world markets.

It is believed that the offering, of up to 30 per cent of the company, will be restricted to UAE nationals. No new money will be raised in the offering, which will be in the form of a sell-down of shares by the current shareholders, energy group Taqa, which has 49 per cent, and Invest AD, the government-owed investment group, with 51 per cent.

Because the terms of the offering are outside the normal IPO rules in the UAE, Massar is seeking an exemption from the regulator, the Securities and Commodities Authority, to list a smaller proportion of its equity.

SCA rules say a minimum of 55 per cent should be put on the market, but recent IPOs in Dubai – notably those of Emaar Malls and Dubai Parks – received approval for a smaller levels from the regulator when they floated on the Dubai Financial Market.

Massar will be the first IPO to test market appetite for listings since investors took fright at the plunging oil price. Although markets have partly recovered in the past few days trading, the most recent IPOs – Dubai Parks and healthcare and education start-up Amanat – are still trading below the Dh1 par value at which they were offered.

Dubai Parks, which fell 3.4 per cent yesterday, has lost 23 per cent of its value in less than two weeks since it began trading.

Amanat, which dropped 1 per cent yesterday, has lost about 15 per cent since its November 27 debut.

Unlike these two companies, Massar has a 15-year track record of trading. It began business in 1999 as the vehicle management arm of Abu Dhabi Water and Electricity Authority (Adwea), but has since expanded to become a vehicle leasing and fleet management group.

When it announced the rebranding to Massar, a company statement said: “The company has grown exponentially, operating throughout the UAE, with annual sales of almost Dh500 million, more than 400 customers, and more than 15,000 vehicles.”

Massar also operates a vehicle rental business under the Payless franchise of Avis Budget Group, and a supply chain management division.

Khalaf Aldaheri, the Massar chairman, said: “Our company boasts a rich heritage of servicing businesses in the UAE for more than fifteen years. We believe that as our customers evolve we need to keep up with their needs and objectives.” He declined to comment on IPO plans.

Banking advisers to the IPO are believed to be National Bank of Abu Dhabi and Australia-based investment bank Macquarie.

fkane@thenational.ae

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Published: December 22, 2014 04:00 AM

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