Dubai: Goldman Sachs Group and Citigroup have dropped off the planned Abu Dhabi initial public offering of an investment vehicle backed by Investcorp, the Middle East’s biggest alternative asset manager.
The two US banks couldn’t get internal approval for the IPO’s price stabilization mechanism, which has never been attempted before in a United Arab Emirates listing.
The Abu Dhabi bourse had requested that the IPO have a price stabilization mechanism once the stock start trading. Q Market Makers, which is backed by Abu Dhabi wealth fund ADQ, was eventually brought on to be the stabilization agent, the people said.
Investcorp announced the planned IPO of Investcorp Capital on Tuesday. Investcorp Capital operates in the alternative investments space, providing investors with access to a global portfolio of private market opportunities, with investments in private equity, real estate, credit and general partner positions in North America, Europe, the Middle East and Asia.
Investcorp Capital and Investcorp will appoint the stabilization manager who will support the price of the shares once they start trading for the stabilization period. The statement didn’t name the stabilization manager or how long the period lasts.
Emirates NBD Capital, First Abu Dhabi Bank and HSBC Holdings are still working on the IPO as bookrunners, according to the statement on Tuesday. Representatives for Investcorp and Citi declined to comment. Representatives for Goldman, QMM and the Abu Dhabi bourse didn’t reply to a request for comment.
In many major global markets, banks are allowed to steady the price of a newly-listed stock for a set period - usually 30 days after listing - via the so-called greenshoe option. The bank known as the stabilization agent can either get those shares from sellers in the IPO, or by snapping them up in the open market, which helps to support the price as it begins trading.
Bahrain-based Investcorp has $50 billion in assets under management and counts some of the Middle East’s wealthiest royals and business moguls as its shareholders.