Rocky European market deters conglomerate, says will maintain Qatar listing
Qatar's Aamal has postponed plans for a London listing after failing to achieve the valuation it had hoped for in a rocky European market for share offerings.
The diversified trading, property and industrial company said Thursday it would not be going ahead with the offering due to "the continuing unfavourable new issues market environment".
Aamal, which had said it would maintain its listing on the Qatar Exchange, hoped to float up to 24 percent of its share capital in the form of global depositary receipts (GDRs) to boost its free float from a previously illiquid 0.3 percent.
"Aamal Company expects to review the timing for its planned GDR offering in due course, subject to market conditions," it said in a statement.
Sources close to the offering said valuation had been the main issue.
"Ultimately when there is a listed price and the price the market is willing to pay is meaningfully below that... they weren't happy to sell the stake and decided to postpone," said one of the sources.
The offering of existing shares would have raised a maximum of between $400m and $500m, the source added.
The European market for new listings has had a tough year so far with investors, jaded by the number of withdrawn deals and poor performance once companies have floated, increasingly demanding greater discounts.
Banks running Aamal's offering had begun bookbuilding without setting a price range to try to reduce the risk of wider market uncertainty impacting the process. But despite attracting orders, the company was not happy with the price.
Aamal's decision comes after Oman-listed Renaissance Services pulled a $500m London offering of its oilfield services unit Topaz in March, while Dubai's DP World has seen its shares perform poorly since its secondary listing in London earlier this month.
"Local companies in the Gulf have a wrong assumption that their companies get better value and attract more liquidity in markets like the London exchange," said Mohammed Yasin, chief investment officer of CAPM Investments in Abu Dhabi.
"GDRs become attractive to investors when there are arbitrage opportunities between local and international markets. If your stock has no liquidity in local bourses, then it won't be of any interest to foreign investors."
But John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh, said Aamal's failure was more a question of timing.
"The Gulf has a lot to offer, given that they haven't been widely affected by the recent upheaval," he said. "They likely think that they'll get a better price in a few months."
Citi and HSBC were joint global coordinators of the offering and Arab African International Bank was a co-lead manager.