Biggest Dubai IPO in 3 Years Has Worst Debut Since 2014
Biggest Dubai IPO in 3 Years Has Worst Trading Debut Since 2014
(Bloomberg) -- Geopolitical risk in the Middle East took a toll on the debut of a stock linked to one of the strongest brands investors can find in the United Arab Emirates market.
Emaar Development PJSC, the U.A.E. real estate developer that began trading in Dubai on Wednesday, fell 4.3 percent. That was the worst debut trading day since 2014 among the 10 biggest initial public offerings in the Middle East and Africa over that time span, Bloomberg data show. The company is the local development arm of Emaar Properties PJSC, a company that’s 30 percent owned by the government of Dubai and the developer of the world’s tallest skyscraper. It closed 0.4 percent lower on Thursday.
While the initial public offering was fully subscribed within half a day of the issue’s opening on Nov. 2, neither investors nor bankers could predict the events of the following two days. That Saturday, Saudi Arabia arrested princes, billionaires and ministers as part of crackdown on corruption and blamed Iran for an attempted missile attack on Riyadh’s airport, while Lebanon’s prime minister unexpectedly resigned from Riyadh. Just two weeks later, advisers scrambled to complete the offering in Dubai.
"There is generally a risk-off environment in the region, and that sentiment was reflected in the first day of trading, especially in the beginning of the day. There was this knee-jerk selling,” said Ayub Ansari, an analyst at Securities & Investment Co. in Bahrain. “As geopolitical concerns abate, investors will start looking back at fundamentals, the stock should find support,” adding that that the new stock is one of the best bets in Dubai at the moment.
Emaar Development dropped as much as 7.1 percent once trading started on Wednesday, before paring losses. The share sale is the largest offering in the emirate since Emaar Malls PJSC raised $1.6 billion three years ago. Emaar Properties finished up 2.6 percent, trimming a 5 percent decline in the previous six sessions.
Here’s a breakdown of some of the biggest debuts in the Middle East and Africa since 2014:
Company | IPO | Country | Amount raised in $ million | 1st day |
| Amanat Holding | November, 2014 | U.A.E. | 370 | -12% |
| DXB Entertainments | December, 2014 | U.A.E. | 690 | -9% |
| Emaar Development | November, 2017 | U.A.E. | 1,300 | -4.3% |
| Steinhoff Africa Retail | September, 2017 | South Africa | 1,200 | 5% |
| Middle East Healthcare | March, 2016 | Saudi Arabia | 470 | 9.8% |
| National Commercial Bank | November, 2014 | Saudi Arabia | 6,000 | 10% |
| Saudi Ground Services | June, 2015 | Saudi Arabia | 750 | 10% |
| Emaar Malls | October, 2014 | U.A.E. | 1,600 | 12% |
--With assistance from Yasmina Daou and Dana El Baltaji
To contact the reporter on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net.
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Stefania Bianchi
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