Sovereign wealth funds boosting Mideast IPOs

DUBAI: Sovereign wealth funds are helping to support a surge of bourse listings in the Middle East by placing big orders for new shares in an attempt to diversify their holdings, a senior banker said yesterday.

High oil prices and a strong economic outlook for the Middle East also mean that equity listings will remain strong in the region despite a drastic falloff elsewhere, said HSBC Middle East equity capital markets head Michael Bevan.

“They (sovereign funds) have participated in many of the recent equity offerings we have led and have been highly supportive in building early momentum,” Bevan said.

“Given the size of some of these funds, their minimum tickets tend to be pretty large,” he said.

Gulf states will provide a mix of listings this year as rich local investors including sovereign funds remain receptive and as international players seek a larger foothold, Bevan said.

Abundant oil revenues and government initiatives to build up regional infrastructure have fuelled economic growth and allowed Middle Eastern markets to decouple to some extent from the downturn seen elsewhere.

“The decoupling argument is weakening and some of the GCC exchanges have recently corrected, however, the region overall still remains relatively immune from the wider contagion in the emerging markets,” he said.

Gulf states are also viewed as a safe haven for investors from a region with neighbours like Iraq, Iran and Pakistan, Bevan said.

The Middle East is looking at a strong pipeline of listings still to come, he said.

Dubai jewellery group Damas International, completed its debut listing this week, raising $271 million as the first retail company to list on the Dubai International Financial Exchange.

Now, Dubai-based contractor Drake & Scull aims to raise 1.2 billion UAE dirhams ($326.7m) in an initial public offering to fuel takeovers in the Middle East and North Africa.

These follow other multi-billion-dollar IPOs like Zain Saudi Arabia and Saudi bank Alinma.

“We are aware of a wide number of companies from across the region that are looking to go public and anticipate some significant offerings coming to the market in the medium-term,” Bevan said.