Mubadala's Yahsat plans to sell at least 30% of shares in Abu Dhabi IPO

The offering is expected to take place in the third quarter of 2021 and will be open to retail and qualified institutional investors

Yahsat operates in more than 150 countries and its five satellites reach more than two thirds of the world’s population. Courtesy: Mubadala

Al Yah Satellite Communications, or Yahsat, the satellite operator owned by Mubadala Investment Company, plans to sell at least 30 per cent of its shares in what would be the first public offering on the Abu Dhabi Securities Exchange since 2017.

The offering and subsequent listing are currently expected to take place in the third quarter of this year, subject to market conditions and relevant regulatory approvals, the Abu Dhabi Media Office said in a statement on Monday.

It will be open to retail and qualified institutional investors. The offer price per share will be determined through a book-building process.

Mubadala will remain the major shareholder after the listing.

“In line with our mandate to drive technological transformation and economic diversification of the UAE, we strive to develop a world-class innovation and technology-driven ecosystem that attracts investment into Abu Dhabi and the UAE more broadly,” said Musabbeh Al Kaabi, chief executive of UAE Investments at Mubadala and chairman of Yahsat.

“We believe the listing of Yahsat on Abu Dhabi’s Stock Exchange further reiterates our role in contributing to the growth of the UAE economy.”

Yahsat plans to sell a minimum of 731.9 million shares and a maximum 975.9 million shares at a nominal value of Dh1, representing a stake that is between 30 per cent and 40 per cent of its Dh2.44 billion ($664.85 million) issued share capital, the company said in an offer document advertised in The National on Monday.

The offer period for the first, second and third tranches will begin on June 27.

The first and third tranches are expected to close on July 6, while the second tranche will end on July 8, the company said.

The price range of the initial public offering will be announced on the first day of the offer period and trading in the company’s shares is set to begin on July 14 on the ADX, according to the offer document.

First Abu Dhabi Bank, Merrill Lynch International and Morgan Stanley have been appointed as joint global co-ordinators while Abu Dhabi Commercial Bank, EFG Hermes and HSBC are joint bookrunners. First Abu Dhabi Bank is the lead receiving bank.

Established in 2007, Yahsat operates in more than 150 countries across five continents. Its five satellites reach more than two thirds of the world’s population, enabling critical communications including broadband, broadcasting and mobility solutions.

The announcement marks an “important milestone in Yahsat’s journey as we continue to build on our strong national and international partnerships and invest in new technology to drive future growth”, said chief executive Ali Al Hashemi.

“We believe we have established a strong and proven operational and financial track record over the years and look forward to welcoming new investors to participate in Yahsat’s growth story.”

The company’s IPO will be the first in Abu Dhabi since Adnoc listed 10 per cent of retail arm Adnoc Distribution on the ADX.

The state oil company subsequently sold another 10 per cent stake and last month raised $1.64bn through the sale of new shares and the issue of exchangeable bonds in Adnoc Distribution, potentially pushing its free float on the ADX to 30 per cent.

Emirates Global Aluminium, the UAE’s biggest industrial company outside the oil and gas sector, is among the other companies evaluating a stock exchange listing.

EGA, which is owned by Mubadala and the Investment Corporation of Dubai, delayed its 2018 listing plans amid market volatility. However, conditions have improved considerably and there is a push for more listings in Abu Dhabi, said Jaap Meijer, managing director and head of research at Dubai investment bank Arqaam Capital.

The Abu Dhabi stock market “is becoming an interesting market – more liquidity, more listings and that is what we want to see”, he said.

Mr Meijer expects sovereign wealth fund assets to be more actively managed, which increases the likelihood of more merger and acquisition deals and public offerings in the future.

“Sentiment has been very favourable for our [UAE] markets,” he said. “Valuations have improved quite a lot and it is still a good time to do listings”.

The ADX, the best performing bourse in the Middle East this year, is up 31.7 per cent since the beginning of the year, with a market value of $261bn.

The exchange, which expects 10 new stock listings this year, plans to double its market capitalisation over the next three years through its "ADX One" strategy.