Abu Dhabi is expected to see its first initial public offering (IPO) of the year "within weeks" as investor sentiment improves following the announcement of Dubai World's debt restructuring proposals. Shuaa Capital, the Dubai-based investment bank, has mandates for three IPOs, several mergers and other buy and sell mandates, said Sameer al Ansari, its chief executive. "In the next few weeks you will see the first IPO on the Abu Dhabi stock market. The floodgates will be opened." Shuaa will manage the share sale, he said.
"There are many clients who are keen to come to the markets, who frankly don't have much other choice. The liquidity is there, but until now people were nervous and uncertain." Mr al Ansari said that last week's proposal by the Dubai Government for the US24.8 billion (Dh91.08bn) restructuring of Dubai World helped to "remove a lot of uncertainty". His comments could point to a possible rebound in capital market activity in the region. Following a dismal year, there could be a pick-up in mergers and acquisitions (M&A), experts say.
In the fourth quarter of last year the value of regional M&A deals dropped by 73 per cent compared with the same quarter in 2008, according to Ernst & Young. The overall value of domestic M&A deals fell by 58 per cent to $11.6bn last year. "Regional and foreign acquirers are looking at regional firms for consolidation or expansion of their business during the downturn and they are looking for concessions," said Phil Gandier, the head of transaction advisory services at the firm, in a new report.
Shuaa Capital, which has been hit by a series of setbacks ranging from a hefty $1 million fine for alleged insider trading, large investment write-downs and a drawn-out wrangle over convertible bonds, is keen to break with its recent past. Last year, Dubai Group, a financial arm of Dubai Holding, become the bank's single largest shareholder. "At Shuaa we definitely succeeded in stopping the bleeding," Mr al Ansari said.
Shuaa Capital, which is based in the Dubai International Financial Centre, has been instrumental in developing capital markets in the UAE. In the past year, the bank has halved its proprietary portfolio to Dh1.2bn at the end of last year. Mr al Ansari said the bank was looking to exit from its remaining investments. Major investments include a 48 per cent stake in Kuwait's Al Kout Industrial Projects and Septech, a water treatment and desalination company.
"We want to do an orderly exit from what is left in the portfolio. The target is 12 to 18 months. But we are not in a hurry. We don't have to do distressed sales," he said. At present, the bank's liabilities stand at Dh1.15bn, of which about Dh300m is short-term bank debt. Shuaa has reported two successive years of losses, starting in 2008 when it lost Dh890m, followed by a Dh530m loss last year.