Abu Dhabi is dangling incentives to revive initial public offerings after a dry spell of nearly four years that’s defied the rally in global stock markets.
The Abu Dhabi Securities Exchange, owned by wealth fund ADQ, is reaching out to state-run firms and family-owned companies, according to people familiar with the process. The bourse, known as ADX, is offering sweeteners that include flexibility on the minimum stake size required for share sales and promising to reduce or forgo listing fees, they said, asking not to be named as the discussions are private.
The inducements have been enough to get the bourse’s pipeline humming with deals. ADX Chairman Mohammed Ali Al Shorafa Al Hammadi has said it may see at least 10 new listings this year, which would be the most on record.
With trading volumes in local equities already suffering from lower oil prices, corporate governance in the United Arab Emirates has also been in the spotlight for investors in the wake of accounting scandals, delistings in Dubai and the experience of large companies such as builder Arabtec Holding, which entered liquidation last year. The Abu Dhabi exchange hasn’t had an IPO since Abu Dhabi National Oil Co. for Distribution PJSC started trading in 2017.
“Driving monetization of our assets is part of ADQ’s strategy,” said Mohamed Alsuwaidi, chief executive of ADQ. “By doing that you basically open up the capital markets not just for local but foreign investors also. We plan to take more assets public on ADX.”
Spokespeople for ADX and the regulator -- the Securities and Commodities Authority -- didn’t respond to requests for comment.
Fertilizers, Drilling
The list of IPO hopefuls has started to take shape in recent weeks.
State-run oil-company Abu Dhabi National Oil Co. is considering selling shares in its drilling business and started preparations for a potential IPO of its fertilizer joint venture in Abu Dhabi. Sovereign wealth fund Mubadala Investment Co. is also close to selling shares in Emirates Global Aluminium PJSC.
Others may follow. What’s more, ADX is also floating the possibility of inviting special purpose acquisition companies to list on the exchange after some conditions are met. Alsuwaidi said ADQ is “exploring” other initiatives such as inviting real estate investment trusts, bond offerings and exchange traded funds
ADX aims to more than double the bourse’s market capitalization over the next three years. It stood at 750 billion dirhams ($204 billion) at the end of December.
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