The National Investor to launch IPO after law change

AWAITING AMENDMENT: The National Investor has said it will launch an IPO once the UAE revises its companies law allowing firms to sell less than 55 percent to the public. (Getty Images)

Abu Dhabi-based investment bank The National Investor would sell shares to the public once amendments are made to a UAE law to allow it to maintain a controlling stake, its chief executive said on Monday.

Under current regulations, private businesses in the second-largest Arab economy must sell 55 percent of their stake in an initial public offering, while founding shareholders are compelled to hold on to shares for two years after the offering.

"Yes, when the companies law is changed and we can sell 30 percent rather than 55 percent we will look at it," Orhan Osmansoy told reporters on Monday in response to a question on whether the firm planned an IPO.

Last August, the UAE approved a legal amendment allowing families to own as much as 70 percent of their companies when they sell shares in IPOs.

The law does not apply to private firms or family-owned businesses with more than one shareholder, Osmansoy said, adding that a revision to the law could unlock a large pipeline of IPOs in the country, home to three stock exchanges.

"That has been a deal breaker," for many private firms, he said. "What will create a catalyst for the IPO pipeline is to tap into businesses that are owned by one or more families."

The flow of initial public offerings in the Gulf Arab region is beginning to recover following a slowdown during a 2006 stock market crash. But current regulations in the UAE have deterred businesses from going public.

Abu Dhabi's Al Qudra Holding, which operates 30 units in industries including real estate, delayed a $1 billion IPO in March until the UAE revises its Commercial Companies Law to allow it to retain majority control.

The National Investor would use any funds raised in an IPO to "spruce up" its balance sheet for its asset management and private equity business lines, Osmansoy said.

An IPO would also give its 95 shareholders a way "to monetise on their holdings" and give the firm capital to expand, he added.

The firm, which won approval to operate in Saudi Arabia in April, would consider acquisitions to enter other markets in the Middle East, Osmansoy said, without being more specific.

"We are on the look out continuously... sometimes assets tend to be overpriced," he said.

The investment bank is also looking to tap the debt markets for as much as 400 million dirhams ($108.9 million) by year-end, he added.

The bank, which was the lead arranger on the IPO of Dubai-based interior contractor Depa, has about five IPO mandates this year, including issues in the UAE and Oman, Osmansoy said. (Reuters)

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