Investors offer $13 bln in UAE Islamic bank IPO
Investors offered about 48 billion dirhams ($13.07 billion), almost 86 times more than sharia-compliant Ajman Bank was looking to raise in the most heavily subscribed United Arab Emirates IPO in 15 months.
"When IPOs are well priced and offer good business cases, there is good demand," said Imad Ghandour, private equity principal at Abu Dhabi-based Gulf Capital.
The Ministry of Economy prices IPOs in the second-largest Arab economy at a fixed level of 1 dirham ($0.272) per share.
Ajman Bank, whose founders include the ruling family of the emirate of Ajman, will use the 550 million dirhams it raised in the initial public offering to help finance its development as the UAE's seventh lender that complies with Islamic principles.
"There is a lot of liquidity in the market looking for good investments and all banks appreciate in value -- particularly if they are Islamic banks," Ghandour said.
The IPO, the UAE's second this year, was the most heavily subscribed since the Dubai government sold shares in a public and private sale of Dubai Financial Market Co in November 2006. That was more than 300 times oversubscribed.
UAE bank assets that comply with Islamic law, including a ban on the receipt of interest, account for about 15 percent of total, Ajman Bank Chief Executive Yousif Khalaf said last month.
"Investors have clearly seen the opportunity that the creation of Ajman Bank offers," Ajman Bank Chairman Sheikh Ammar bin Humaid al-Nuaimi said in a statement on Monday. A person familiar with the transaction told said on Sunday the IPO was at least 60 times oversubscribed.
Shares of Ajman Bank will list in the Dubai Financial Market before July, the bank said. UAE nationals and residents were allotted 422.5 million shares, 27.5 million went to the UAE Ministry of Finance and 100 million shares were offered to other investors.
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Family-ruled Ajman, the second-smallest member of the UAE federation by population, sold 550 million shares, or a 55 percent stake, at 1 dirham each in the 10-day offering last month. HSBC Holdings Plc advised on the sale.
By comparison, the IPO of Abu Dhabi-based Islamic insurer Mithaq Lil Takaful was 43 times oversubscribed in February.
Gulf Arab investors plan to sell about $10 billion of stock to the public during the next three years as the appetite for Gulf IPOs picks up following a 2006 stock market crash, Gulf Capital said in January.
Investors routinely piled into UAE IPOs during a stock market rally in 2005 when IPOs were on average 73 times oversubscribed, according to estimates of private equity firm Gulf Capital.
"People are more educated now because they have seen the ups and downs," said Ghandour.
Shares of DP World, which raised almost $5 billion in the Middle East's biggest IPO last year, have plunged almost 35 percent since they listed in November.
National Bank of Abu Dhabi said last month it expected to manage eight UAE IPOs this year, with three looking to raise at least 4 billion dirhams by the end of June.
Ajman Bank plans to open its first branch in Ajman in the fourth quarter, and another nine branches covering the six other UAE members within two years, Khalaf said last month.
Noor Islamic Bank, partly owned by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, started operations in January as the country's sixth Islamic lender.
Abu Dhabi, meanwhile, plans to start operations of its sharia-compliant Al Hilal Bank in June. Source
"When IPOs are well priced and offer good business cases, there is good demand," said Imad Ghandour, private equity principal at Abu Dhabi-based Gulf Capital.
The Ministry of Economy prices IPOs in the second-largest Arab economy at a fixed level of 1 dirham ($0.272) per share.
Ajman Bank, whose founders include the ruling family of the emirate of Ajman, will use the 550 million dirhams it raised in the initial public offering to help finance its development as the UAE's seventh lender that complies with Islamic principles.
"There is a lot of liquidity in the market looking for good investments and all banks appreciate in value -- particularly if they are Islamic banks," Ghandour said.
The IPO, the UAE's second this year, was the most heavily subscribed since the Dubai government sold shares in a public and private sale of Dubai Financial Market Co in November 2006. That was more than 300 times oversubscribed.
UAE bank assets that comply with Islamic law, including a ban on the receipt of interest, account for about 15 percent of total, Ajman Bank Chief Executive Yousif Khalaf said last month.
"Investors have clearly seen the opportunity that the creation of Ajman Bank offers," Ajman Bank Chairman Sheikh Ammar bin Humaid al-Nuaimi said in a statement on Monday. A person familiar with the transaction told said on Sunday the IPO was at least 60 times oversubscribed.
Shares of Ajman Bank will list in the Dubai Financial Market before July, the bank said. UAE nationals and residents were allotted 422.5 million shares, 27.5 million went to the UAE Ministry of Finance and 100 million shares were offered to other investors.
IPO PIPELINE
Family-ruled Ajman, the second-smallest member of the UAE federation by population, sold 550 million shares, or a 55 percent stake, at 1 dirham each in the 10-day offering last month. HSBC Holdings Plc advised on the sale.
By comparison, the IPO of Abu Dhabi-based Islamic insurer Mithaq Lil Takaful was 43 times oversubscribed in February.
Gulf Arab investors plan to sell about $10 billion of stock to the public during the next three years as the appetite for Gulf IPOs picks up following a 2006 stock market crash, Gulf Capital said in January.
Investors routinely piled into UAE IPOs during a stock market rally in 2005 when IPOs were on average 73 times oversubscribed, according to estimates of private equity firm Gulf Capital.
"People are more educated now because they have seen the ups and downs," said Ghandour.
Shares of DP World, which raised almost $5 billion in the Middle East's biggest IPO last year, have plunged almost 35 percent since they listed in November.
National Bank of Abu Dhabi said last month it expected to manage eight UAE IPOs this year, with three looking to raise at least 4 billion dirhams by the end of June.
Ajman Bank plans to open its first branch in Ajman in the fourth quarter, and another nine branches covering the six other UAE members within two years, Khalaf said last month.
Noor Islamic Bank, partly owned by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum, started operations in January as the country's sixth Islamic lender.
Abu Dhabi, meanwhile, plans to start operations of its sharia-compliant Al Hilal Bank in June. Source
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