Shuaa chief expects return of public offers

The chief executive of Shuaa Capital says the company expects to manage an IPO on Abu Dhabi Stock Exchange in the next few weeks.

Shuaa Capital is predicting a flood of initial public offerings (IPOs) in coming months, which would be a welcome change given that capital markets have been dry of late. The Dubai investment bank is counting on it to complete a turnaround. It has been more than a year since the last IPO in the country but Sameer al Ansari, the chief executive of Shuaa Capital, said on Tuesday he expected the company to manage an IPO on the Abu Dhabi Securities Exchange "in the next few weeks". "The floodgates will be opened," he said.

Shuaa needs the fees generated from such deals to further shift away from proprietary trading and towards other revenue-generating activities, said Ali Khan, the managing director of Arqaam Capital in Dubai. "It is a safer bet from a shareholders perspective," Mr Khan said. The company reported two consecutive years of losses, with Dh890 million in 2008 and Dh530m last year, in part due to large investment write-downs. It is in the process of winding down its existing portfolio.

Several dozen UAE companies had announced plans to go public but put those plans on hold because of a shortage of liquidity caused by the financial crisis. It is not clear, however, that investor appetite has returned to pre-crisis levels. "Investors will be far more selective in 2010 than they were two years ago," Mr Khan says. To boost its revenue, Shuaa also needs the bigger companies - not just any companies - to seek access to the capital markets. Investment banks typically take between 2 and 3 per cent of the capital raised as a fee, so smaller offerings will not do much to bolster the bottom line.

After being badly hit last year, Shuaa shares have risen 22.8 per cent in the past month. Mr al Ansari said he thought Dubai World's announcement last week of its debt restructuring proposals would "remove a lot of the uncertainty" in the capital markets. His shareholders hope he is right. [e-mail] [e-mail]