UAE Companies put off IPO plans because of turbulence in market

ABU DHABI // Five to six companies prepared to go public with listings on the UAE bourses are being advised to hold off in light of turbulent markets.

“They saw the market and postponed it because this is not the right time for them,” Abdullah Al Turifi, the Securities and Commodities Authority’s chief executive said on the sidelines of an FNC session. “We were supposed to have five to six initial public offerings this year. It’s their decision, but we cannot force or stop them. But sometimes we can ask them, is this the right time?”

Newly listed companies have lost up to 30 per cent in the value of their shares since the market tumbled in October, Mr Turifi said. Massar Solutions, the fleet management and vehicle rental group, will go ahead with its public sale, however.

A slew of initial public offerings took place last year, amid strong sentiment and investor appetite for riskier assets in the wake of a bull-market rally that took place from January to May. Big ticket offerings included Emaar’s retail business, which raised US$1.6 billion (Dh5.88bn), but originally shored up as much as $80bn from investors. Marka’s Dh500 million IPO attracted Dh10bn, which was redistributed back to investors.

But markets have declined considerably since oil markets shook Arabian Gulf equities.

The Abu Dhabi Securities Exchange General Index lost 13.5 per cent over the past three months, and the Dubai Financial Market General Index has tumbled 27.8 per cent in the same period.

“I think it’s the right advice to be given at the current time due to the latest IPOs that came into place in 2014 that affected the market in liquidity status to a certain extent,” said Marwan Shurrab, fund manager at Dubai-based Vision Investments & Holdings.

“Due to the volatility in the market at the current time, it is not ideal for IPOs to take place and I’d expect to see a push-back of any coming IPOs in 2015 till we see more stability in the market.”