Dubai: Dubai’s toll-gate operator Salik is ready to be an instant volume driver on DFM, where the stock will start trading from 10am today (September 29).
“We believe investor participation is tilted towards retail investors given the decline in global indices,” said Junaid Ansari, Senior Vice-President of Investment Strategy and Research at Kuwait-based Kamco Invest.
“Institutional investors tend to weigh risk-and-return associated with a market as well as the asset class, while retail investing is mostly sentiment-driven. As such, we can expect to see higher retail buying in the near term for new IPOs in Dubai and the region.”
There is one in Abu Dhabi, where the private hospital and clinic operator Burjeel Holdings is floating 11 per cent. Here too, analysts reckon the IPO will have an easy run towards garnering support from local retail investors. (The market is also buzzing about another IPO emerging from Dubai in October itself.)
In Saudi Arabia, Arabian Drilling Co. is testing investor sentiments with a 30 per cent offer, setting a price range of SR90-SR100. Ansari doesn’t believe the range represents a relative premium given how global markets are buckling under pressure.
“Recent reports show the IPO of Arabian Drilling is fully covered across the price range,” said Ansari. “This comes despite the slide in the market, and we believe that the investor interest reflects the solid fundamentals of the company. And the fact that it stands to benefit from higher drilling activity in the coming years as oil producers aim to expand production to take advantage of the expected elevated crude and commodity prices.”
3 IPOs, 3 volume drivers
Going over the recent past, three IPOs – two in Dubai and one in Abu Dhabi – continue to be pace-setters post-listing. DEWA, Tecom and Abu Dhabi’s Borouge ‘garnered healthy interest from the investors both before and after listing,” said Ansari. “The three are some of the most actively traded stocks, with aggregate volumes of 4.1 billion shares.
“Similarly, value traded in the three stocks accounted for 17.1 per cent of aggregate value (or Dh11.5 billion until September 27).
“For Salik, the significant interest during the IPO that was oversubscribed by over 50x with $50 billion in orders should result in higher post listing volumes. The company stands to benefit from some the recently announced plans by the Dubai government.”