Abu Dhabi’s $1.4bn IPO fund shortlists six companies for listing on ADX

Abu Dhabi’s Dh5 billion ($1.4bn) IPO Fund has shortlisted six private sector companies to potentially receive investment and advisory services for listing their shares on the Abu Dhabi Securities Exchange, says the chairman of the Abu Dhabi Department of Economic Development (Added).

It is also in discussion with 30 other companies to list on the capital’s stock market, Mohamed Al Shorafa, chairman of Added, said. “As we push through with our plans to further activate a wave of IPOs [initial public offerings] in the capital, the Abu Dhabi IPO Fund, which is managed by the Added, has already shortlisted an initial list of six private sector companies towards receiving potential investment and advisory services, helping them qualify for a listing on ADX,” Mr Al Shorafa said during a keynote address at the Abu Dhabi Finance Week, which began on Monday.

The fund was launched last year to encourage and support private companies to list on the local stock market. It has already supported three companies this year to list their shares on the ADX, Mr Al Shorafa told The National on the sidelines of the event.

The other six shortlisted companies are awaiting the “right window” to list shares and all six are expected to come to the market by the end of the first half of next year.

Public offerings will depend on “other listings and [deals in] other markets and the preparation of companies because it would be quite difficult that you have two listings in Dubai and two at the same time in Abu Dhabi … it needs to to be spread [apart]", he said.

One of six companies supported by the fund is Americana and “the rest are on the way”, he added.

Americana, the largest quick service restaurant operator in the Mena region, on Monday said it may raise as much as $1.8 billion from its IPO on Saudi Arabia Tadawul and the ADX.

The company has set the price range at Dh2.50 (2.55 Saudi riyals) to Dh2.62 per share, implying an equity value for the group of $5.73bn to $6.01bn.

There are several companies from outside the region that are also seeking the fund's support to list their shares on the ADX, Mr Al Shorafa said.

The fund is “sector agnostic” and the fund’s task force has been assessing local and regional companies from various sectors to shortlist qualified candidates that it can support during the pre-IPO and IPO phases, he said.

“But we put more emphasis on some sectors like FinTech, consumer, health care, agriculture technology, which are in line with the economic strategy sectors of [Abu Dhabi],” Mr Al Shorafa said.

The support offered by the IPO Fund combines potential investment in their public book-building phase, tailored relationship management services and ecosystem access that includes regulatory stakeholders and market contributors.

“Not all companies need investments”, he said, adding that if the fund invests in a company, the holding period of that investment will be until markets and shares are stabilised.

“It could be one year, or two to three years. It depends from company to company. It is not cast in stone that we only stay for [a certain period],” he said.

“Our mandate is to further strengthen the emirate’s business and investment environment by prioritising relationship management support services that it offers exclusively, thus ensuring streamlined, efficient and on-time processes, for building a thriving investment culture in the emirate, deepening financial markets and catalysing the growth of the private sector as a whole,” Mr Al Shorafa said.

Abu Dhabi and the UAE’s economy continues to recover from the coronavirus pandemic on the back of higher oil prices and government initiatives to support the growth of the economy.

The country's economic output, which expanded 3.8 per cent in 2021, is expected to grow 5.4 per cent in 2022 and 4.2 per cent in 2023, according to the latest projections from the UAE Central Bank.

Emirates NBD recently raised its UAE growth forecast to 7 per cent in 2022, owing to a higher estimate for the energy industry's output and the “robust growth” of its non-oil sector, setting up the country for its fastest annual expansion since 2011, when output grew by 6.9 per cent.

Meanwhile, Abu Dhabi Commercial Bank projects growth of 6.2 per cent was also driven by strong non-oil gross domestic product growth.

“Abu Dhabi and in extension the UAE have and continue to weather the global headwinds well, thanks to a robust macroeconomy, standards, regulations, business-friendly and open market policies … our well-developed infrastructure and numerous multilateral relations that ensure free trade remains uninterrupted,” Mr Al Shorafa said.

Abu Dhabi's economy is expected to grow this year in line with the Central Bank's estimates for the UAE's GDP growth, he said.

ADX, the Arab world's second-largest stock market, has experienced a large number of listings on the Abu Dhabi market this year, including Borouge, the joint venture between Adnoc and Austrian chemicals producer Borealis, Abu Dhabi Ports Group, the operator of industrial cities and free zones in the emirate.

Last month, Abu Dhabi healthcare provider Burjeel Holdings listed its shares on the ADX after raising more than Dh1.1bn from an 11 per cent stake sale in the company’s IPO.

Bayanat, a geospatial data products and services provider owned by Abu Dhabi-based artificial intelligence and cloud computing company G42 also listed its shares on the ADX last month.

Abu Dhabi’s LuLu Group International is also planning to launch an IPO next year. Last year, nine companies listed on the Abu Dhabi bourse, including Adnoc Drilling, Fertiglobe, the world’s largest seaborne exporter of urea and ammonia combined, Alpha Dhabi, the property and construction company owned by IHC, and Yahsat, the satellite operator owned by Mubadala Investment Company.

The ADX recorded a surge in liquidity and foreign investment in 2021 on the back of new listings, anchoring it as one of the world’s best-performing equity gauges in 2021.

“The Abu Dhabi IPO Fund forms a critical part of Added’s mandate to further activate the emirate’s global capital markets and financial sector landscape within the macroeconomy,” Mr Al Shorafa said.

The Middle East and North Africa market recorded a 500 per cent annual increase in the number of listings during the first six months of this year, with 24 IPOs raising $13.5bn, according to an EY report on the region's IPOs. In the second quarter of 2022, nine IPOs raised about $9bn.

The UAE was the biggest IPO market in terms of the aggregate value of deals, while Saudi Arabia led volume with five IPO deals in the first six months of the year, according to the EY data.