The Dh2.5 billion IPO of Dubai Parks and Resorts is to become a litmus test for investor sentiment as the emirate’s benchmark index fell into bear territory for the second time this year.
Dubai Parks yesterday announced big levels of oversubscription for its offering, with some of the most prestigious investors in the region queuing for shares in the company.
But some investors have become uneasy because of recent weakness in the Dubai Financial Market, where the IPO will begin trading tomorrow. Last week the healthcare and education start-up Amanat was the first IPO to fail to achieve a first day premium on the DFM for five years.
“We have had a great reaction to our IPO in which we strategically retained a specific tranche for retail investors so that they received a favourable and higher allocation, ensuring that more people could share in the growth of Dubai Parks,” said Raed Al Nuaimi, the chief executive of Dubai Parks.
The offer was 65 times oversubscribed by institutions, including sovereign wealth funds like Kuwait Investment Authority and Qatar Investment Authority, as well as big global investors and regional family offices.
The tranche reserved for UAE investors, some 40 per cent of the IPO, was oversubscribed 10 times, with institutional and high net worth individuals seeking nearly 14 times the number of shares on offer. Individual retail investors oversubscribed by 1.63 times.
“The low participation by retail investors tells me that the flipping opportunity has been reduced and therefore I wouldn’t be surprised if we saw a below-par opening on this stock, considering current market conditions,” said Mohammed Ali Yasin, managing director of the brokerage firm NBAD Securities.
“It would be a disaster if another IPO opens below par in the sense that it would give a very negative indication to investors,” he added.
The DFM General Index has fallen around 4 per cent since the Amanat opening, mainly on fears for regional capital markets of the fallout from lower oil prices. Yesterday it fell 3.34 per cent, with the blue chip property group Emaar the biggest loser, down 7.04 per cent.
The quoted DFM stock was down 5.56 per cent.
Dubai Parks will be hoping its cushion of unsatisfied institutional demand will be enough to see it through what could be a testing opening session on the DFM, where retail sentiment often determines share performance.
Some fear that liquidity is becoming a problem for the market, with an estimated Dh10bn being sucked out via the IPOs that have been launched in the past two months, like Emaar Malls, Marka and Amanat.
“We believe Dubai Parks has the potential to generate significant value over the long term,” said Mr Al Nuaimi. “The strong response we have seen from both institutional and retail investors validates the project’s future prospects.”
fkane@thenational.ae
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Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
- Stay invested: Time in the market, not timing the market, is critical to long-term gains.
- Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
- Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
if you go
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
A list of the animal rescue organisations in the UAE
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
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Company Profile
Company name: OneOrder
Started: October 2021
Founders: Tamer Amer and Karim Maurice
Based: Cairo, Egypt
Industry: technology, logistics
Investors: A15 and self-funded
Various Artists
Habibi Funk: An Eclectic Selection Of Music From The Arab World (Habibi Funk)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
COMPANY%20PROFILE%20
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
More coverage from the Future Forum
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
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