Shares of Shuaa Capital rose 0.5 per cent even as the broader market declined yesterday after the Dubai-based investment bank posted its fourth quarterly profit in more than five years amid a pickup in capital markets activity.
Shuaa swung to a profit of Dh8.2 million in the period ended March 30, after its investment banking division won a mandate to run the initial public offering of Able Logistics Group — a freight forwarding, land transport and warehousing services company. The bank posted a net loss of Dh5.9m in the year-earlier period.
Shuaa “is in the process of realising further revenue upside from the execution of its investment banking pipeline” and “the inflow of assets under management”, said Sheikh Maktoum Hasher Al Maktoum, the executive chairman of Shuaa Capital. “Investment banking continues to perform well with the increasing number of initial public offerings and corporate transactions being worked on.”
Shuaa's shares listed on the Dubai Financial Market closed at Dh1.72, while Dubai's main index declined 1.6 per cent to 4,759.15 points.
Shares listed on Dubai's stock market, now in the midst of a bull run, have rocketed 41 per cent since the start of the year. Shares listed on the Abu Dhabi Securities Exchange General Index have risen 20.3 per cent in the same period to trade at 5,162.92 points.
In June the international index compiler MSCI, which tracks US$7.3 trillion in equities around the world, classified the UAE as an emerging market, upgrading it from its frontier-market status. And in November, Dubai, which had been hit hard by a housing crash and debt crisis five years ago, won a bid to host World Expo 2020.
The two events boosted investor appetite for riskier assets, which caused a dramatic improvement in liquidity and prices.
Reignited investor interest in local equity markets has encouraged companies to seek public listings.
National Bank of Abu Dhabi, the biggest bank by market capitalisation, expects as many as six UAE companies to go public this year, Majd Maaiteh, the head of securities, said in February.
Dubai's biggest developer, Emaar Properties, on March 15 said it would sell up to 25 per cent of its retail unit in a $2.5 billion initial public offering.
Subscription began yesterday for Marka’s Dh500m IPO on the Dubai Financial Market exchange.
“Many companies did not have an interest to raise money in an IPO over the past years because of valuation. It was not attractive at all to raise equity in a low-valuation environment,” said Sebastien Henin, the head of asset management at The National Investor, a boutique investment bank in Abu Dhabi.
“But now they are at rich and decent levels, so it makes a difference for them. They want to raise equity and benefit from the market rally we have seen in the last 18 months. To be honest with you, I expect more IPOs in the coming quarters — it makes a lot of sense.”
halsayegh@thenational.ae
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