Local markets’ IPO appetite increases according to Daman’s Market report
- 55% of Daman’s post IPO capital to be made available to public
Dubai (United Arab Emirates): Dubai-based Daman Investments, one of the UAE’s leading investment management companies, today announced during their annual press conference their plans to proceed with an initial public offering by floating 55% of their equity contingent on obtaining all necessary regulatory approvals. The decision to float fulfills Daman’s previous announcement to go public made in 2009 and the company plans to list its shares on the Dubai Financial Market (DFM) during Q1 2015.
Daman Investments offers innovative investment products and services to both regional and international clients, and provides investment management and development capital investment opportunities as well as brokerage operations through its subsidiaries. “Funds raised through the IPO will be used to scale up our existing business and invest in various opportunities in the UAE and the wider region,” said Daman Investments’ Chairman & Founder, Mr. Shehab Gargash.
It is worth mentioning that none of the current shareholders are exiting through the offering. The new funds will increase the capital of the company equating to 55% of post share capital with existing shareholders diluting to 45%.
“We at Emirates Investment Bank are excited to be acting as the Financial Advisor and Offering Manager for Daman on this important IPO. We are truly excited about playing a role in helping Daman cross this important milestone in its history. We have great confidence in the success of this IPO given Daman’s track record, investor base, recognition and market status, as well as the strong current interest in IPOs in our region.” said Khaled Sifri, CEO of Emirates Investment Bank (EIBank) who have been appointed by Daman as the lead manager with White & Case acting as legal advisors to the IPO.
During the press conference, Daman Investments also unveiled the findings of its annual market forecast report according to which the UAE equity markets’ fundamentals remain robust.
As per Daman’s report titled ‘Year of the Primaries’, activity at the UAE bourses -the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) will regain momentum in Q4, 2014 as investors position themselves for full year results, the upcoming dividend season and the forthcoming IPO pipeline.
In the medium to long-term, the market outlook remains upbeat as indicated by 9 out of the 13 key factors being positive which include the general macro environment, real estate revival, and the healthy state of the UAE banks, increased corporate earnings and liquidity as well as the recent MSCI market upgrade.
At the core of this optimistic outlook sits the UAE’s burgeoning banking sector with increasing growth in net interest incomes and declining trends in non-performing loans, metrics which underline the overall corporate sector’s economic recovery. Dubai-listed banks grew their bottom line by 58% in the first half of this year with Abu Dhabi listed banks growing by 13% for a combined net income of AED17.5bn.
The UAE-listed corporates continue to post stellar numbers given the solid state of the UAE’s economy. Telecommunications stocks in ADX and DFM grew 14.69% and 15.58% in the first half of the year respectively. The important real estate sector recorded a staggering 78.77% YoY increase in bottom line, aiding the total net income of companies listed in the DFM to grow by 75% compared to the previous year.
On the back of such stellar earnings and given the strong momentum during this year, Daman predicts a dividend season that will be stronger than FY’13 when dividend yields for DFM came in at 2% and ADX at 3.65%.
The yields on UAE sovereign debt continue to be relatively low in comparison to the earnings yields’ of the UAE’s stock market indices and given the high equity risk premium available. The report concludes that equities will continue to be the preferred asset class in the UAE.