Several recently-listed shares in Dubai are now trading below their initial public offering (IPO) price, mainly hit by a fall in oil prices, and that signals the waning appetite of investors in the Gulf region. Among the latest IPOs, Dubai school operator Taaleem Holdings, which started trading Tuesday after raising $204 million, plunged by 13.3% to $0.70 (AED 2.58) around 10:18 am GST Wednesday, against an offer price of $0.82 (AED 3).
The school operator, the second largest in the UAE with 26 schools in the Gulf state, has attracted $3.7 billion in investor orders and priced the offering at the top of the price range.
Business park operator Tecom Group, which raised $463 million (AED 1.7 billion) in an IPO in July this year, dropped by 13.9% to $0.63 (AED 2.3) around 10:10 am GST Wednesday.
Likewise, shares of Dubai Electricity & Water Authority (DEWA), which raised $6.1 billion (AED 22.4 billion) in April this year in the world’s second IPO, fell by 5.2% to $0.64 (AED 2.35) around the same time. Although markets across the globe sharply fell this year due to high inflation and economic slowdown, Middle Eastern bourses were performing better, thanks to better energy prices earlier this year.
“Global equities and oil prices have been weak, and Dubai’s listings are not immune from that,” Bloomberg quoted Hasnain Malik, a strategist at Tellimer, citing a research note.
“Dubai’s recent IPOs, which were oversubscribed, may also have seen the exit of retail investors speculating on quick returns and their replacement by an institutional base which is more picky about valuation.”
Morgan Stanley analysts cut their outlook for Middle Eastern equities, including in Saudi Arabia, Qatar, and Kuwait, according to a Bloomberg report.
High oil prices and strong investor appetite in the region earlier this year led governments in the Gulf region to encourage state-owned companies and family-owned ones to go public.
Companies in the Gulf region, mainly state-owned entities, have attracted billions of dollars from investing public and institutions this year. The energy-rich region has been a rare bright spot for primary offers, with a surge in oil prices earlier this year boosting Gulf economies and stock markets.
