The Dubai initial public offering of remittances and money exchange firm Al Ansari Financial Services received orders for all shares offered within an hour of books opening, marking a strong start for the emirate’s first listing of the year.
The owners of Al Ansari are seeking to raise as much as $210 million in the IPO, with the price range set at 1 dirham to 1.03 dirhams (28 cents) per share, according to a statement on Thursday. Al Ansari Holding LLC is selling 750 million shares in the offering, or a 10 percent stake.
The order books were covered across the price range in less than an hour, according to terms of the deal seen by Bloomberg News, showing strong demand for the offering despite broader market turmoil following the collapse of Silicon Valley Bank and worries about Credit Suisse Group AG’s financial health.
The price range implies a dividend yield of at least 7.8 percent to 8 percent, higher than previous IPO candidates in the city and enticing investors with juicy returns in a high interest rate environment.
Al Ansari is the first IPO in Dubai this year, as well as one of the first family-owned businesses in the United Arab Emirates to go public. Last year, listings in the city raised a combined $8.5 billion amid a privatization drive designed to increase trading volumes and catch up with IPO activity in neighboring Abu Dhabi and Riyadh.
The Middle East continues to be a bright spot for IPOs globally after high oil prices buoyed stock markets and drove investor inflows last year. This week, Adnoc Gas surged as much as 25 percent on its Abu Dhabi debut after the world’s largest IPO of 2023 while Abraj Energy Services also jumped on its first day of trading in Oman.
Most of last year’s IPOs in Dubai were state-owned, making Al Ansari a rare private company listing. Dubai is encouraging private and family-owned businesses to list, though the mixed performance of last year’s crop might deter potential issuers.
Only two out of last year’s five Dubai IPOs are currently trading above their offering prices, data compiled by Bloomberg show. School operator Taaleem Holdings PSC was the only privately-owned company to go public and has dropped about 12 percent from its IPO price.
Al Ansari Exchange was set up almost 60 years ago and currently has over 230 branches in the UAE, making it one of the largest exchange companies in the country. In addition to exchange services, it offers remittances, services for paying domestic workers, savings plans and cash management solutions for companies, according to its website.
Al Ansari posted a net profit of 595 million dirhams in 2022 and expects to pay a dividend of at least 600 million dirhams for 2023. The company is planning a minimum payout ratio of at least 70 percent of net profit after that, according to its prospectus.
Abu Dhabi Commercial Bank, EFG Hermes and Emirates NBD Capital are managing the IPO.