Hope for more private UAE listings follows Spinneys IPO

May 2, 2024, 4:27 AM

An investor looks at a screen in Dubai Financial Market. Spinneys received over $19 billion in orders for its $375 million IPO

The record-breaking interest in supermarket giant Spinneys’ upcoming listing on the Dubai Financial Market could start a rush of private listings in the UAE, industry experts have predicted.

The country’s privatisation strategy has led to a raft of government-owned entities being listed on the Dubai and Abu Dhabi stock exchanges.

Last year there were 48 initial public offerings (IPOs) across the GCC, with total proceeds of nearly $11 billion. In the UAE more than $6 billion was raised from eight listings of predominantly government-owned entities.

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Spinneys’ imminent IPO marks a rare listing from the private sector. The company received more than $19 billion in orders for its $375 million IPO, which was 64 times oversubscribed, according to a statement on Wednesday. Interest in the company was 35 percent international and 65 percent regional.

Rudy Saadi, managing director and head of Mena equity capital markets at Citi Bank, said $2 billion had been raised through IPOs in the UAE in the year to date.

“We are seeing more private companies going public, which is fantastic,” he said.

Al Ansari Financial Services was the last family-owned company to go public last year with an IPO that raised $210 million. Its share price has remained consistent and closed at AED1.04 per share on Wednesday.

“We’d like to see more companies coming to list sooner because obviously the demand is there,” Hitesh Asarpota, chief executive office of Emirates NBD Capital, told AGBI on the sidelines of the Capital Market Summit in Dubai on Wednesday.

Retail conglomerate LuLu Group International is expected to be the next public listing and has appointed local and international banks to lead its proposed $2 billion IPO.

Dubai’s Alec Engineering and Contracting is also reportedly considering a listing.

“Further sector diversification should pave the way for many growth opportunities on the [Dubai] exchange,” said Prasad Chari, MD of equity capital markets at Emirates NBD Capital.

Hamed Ali, CEO of Dubai Financial Market and Nasdaq Dubai, said: “We need to have additional IPOs because investors are willing to be active on the primary market.

“We’ve seen through the IPOs that we’ve done, we have access to capital. The issuers needed AED35 billion worth of capital. The demand was AED1.1 trillion.”

While IPOs over the past decade have concentrated on real estate and financial institutions, Chasi said there had been a change in recent years.

He pointed to the listing of Dubai parking management company Parkin, which raised nearly $428 million in March, and the Spinneys listing on May 9, which is expected to give the company a market capitalisation of about AED5.51 billion ($1.5 billion).

“These are high-growth opportunities, reflecting pretty much the consistency of the economy of Dubai,” he said.

Asaporta said family offices might join the raft of listing announcements before the end of the year.

So far this year there have been eight IPOs in the UAE and Richard Cormack, managing director, co-head of equity capital markets in Emea and co-head of UK investment banking at Goldman Sachs, expected a flurry of listings to come.

“We see a back-ended year in this region and we think the outlook in the longer term continues to be very positive,” he said.