Expected changes in new Companies Law on floating 30-50 per cent of shares through Initial Public Offering (IPO) may encourage family businesses to go public and will bring the boom in IPO activity during next couple of years, a top executive said.
“It can help launch hundreds of companies going public and raising hundreds of millions of dollars worth capital,” said Tom Healy, director-general of Abu Dhabi Securities Market (ADSM).
Speaking at a session on the UAE Global Investment Forum, he said new offerings will give depth to the market, which has Dh435 billion capitalisation from 66 listed companies and two convertible bonds.
He said new companies law may allow offering lesser percentage of shares to general public through IPOs, against mandatory condition of 55 per cent, which is detrimental to the IPO activity, as a less number of firms show interest in raising capital from equity markets. Healy said stock markets in the UAE and region are undergoing tremendous transformation, from local capital markets to becoming regional.
ADSM, he said for instance has entered into an MoUs with Karachi and Lahore stock exchanges and others to allow cross-listing and share trading, which will help foreign companies to raise capital.
He also stressed to improve the regulatory structure on European style, which will help better the business environment on stock exchanges.
While focusing on the self-governance, ADSM has introduced tough guidelines on corporate governance, transparency and disclosures, he said adding that this process will be completed by the second half of this year.
“The remaining regulations coming into effect will create more credibility and trust in the share market business as well as companies’ affairs,” he said.
He said that his recent remarks on one stock market for the GCC region, after the introduction of common currency, were published out of the context by a section of Press.
“One stock market would be a bad idea, as it would eliminate the competition, which is the essence of every business,” he added.
He was of the view that there should be a secondary market or a separate counter for Small and Medium Enterprises (SMEs) or companies with little paid-up capital, where they could raise capital to meet their expansion requirements.
“This counter/market would not trade the shares,” he elaborated.
He said that in order to widen the scope of share markets and encourage institutional investors, Emirates Securities & Commodities Authority (Esca) was framing rules and regulations for allowing short selling, market-making, and stock landings like features to attract portfolio investors at the stock markets.
Orphan Osmansoy, CEO of National Investors, agreed that family businesses would not want offering 55 per cent of shares to general public, and retaining 45 per cent as sponsors.
He was of the view that minimum listing requirements are key to IPO boom. Osmansoy expected launching of 12-18 IPOs in one-year time.
In reply to a question on the linkage of plunging real estate scrips that resulted in three major corrections on stock markets recently at a time when the housing sector itself was growing, Osmansoy linked it market panic caused by housing crisis emanating out of subprime crises and jittery equity markets in US and elsewhere.
To a question on DP World recent IPO and poor response it generated from the investors, he said book building allocation were poorly managed that led to a disaster. Source
“It can help launch hundreds of companies going public and raising hundreds of millions of dollars worth capital,” said Tom Healy, director-general of Abu Dhabi Securities Market (ADSM).
Speaking at a session on the UAE Global Investment Forum, he said new offerings will give depth to the market, which has Dh435 billion capitalisation from 66 listed companies and two convertible bonds.
He said new companies law may allow offering lesser percentage of shares to general public through IPOs, against mandatory condition of 55 per cent, which is detrimental to the IPO activity, as a less number of firms show interest in raising capital from equity markets. Healy said stock markets in the UAE and region are undergoing tremendous transformation, from local capital markets to becoming regional.
ADSM, he said for instance has entered into an MoUs with Karachi and Lahore stock exchanges and others to allow cross-listing and share trading, which will help foreign companies to raise capital.
He also stressed to improve the regulatory structure on European style, which will help better the business environment on stock exchanges.
While focusing on the self-governance, ADSM has introduced tough guidelines on corporate governance, transparency and disclosures, he said adding that this process will be completed by the second half of this year.
“The remaining regulations coming into effect will create more credibility and trust in the share market business as well as companies’ affairs,” he said.
He said that his recent remarks on one stock market for the GCC region, after the introduction of common currency, were published out of the context by a section of Press.
“One stock market would be a bad idea, as it would eliminate the competition, which is the essence of every business,” he added.
He was of the view that there should be a secondary market or a separate counter for Small and Medium Enterprises (SMEs) or companies with little paid-up capital, where they could raise capital to meet their expansion requirements.
“This counter/market would not trade the shares,” he elaborated.
He said that in order to widen the scope of share markets and encourage institutional investors, Emirates Securities & Commodities Authority (Esca) was framing rules and regulations for allowing short selling, market-making, and stock landings like features to attract portfolio investors at the stock markets.
Orphan Osmansoy, CEO of National Investors, agreed that family businesses would not want offering 55 per cent of shares to general public, and retaining 45 per cent as sponsors.
He was of the view that minimum listing requirements are key to IPO boom. Osmansoy expected launching of 12-18 IPOs in one-year time.
In reply to a question on the linkage of plunging real estate scrips that resulted in three major corrections on stock markets recently at a time when the housing sector itself was growing, Osmansoy linked it market panic caused by housing crisis emanating out of subprime crises and jittery equity markets in US and elsewhere.
To a question on DP World recent IPO and poor response it generated from the investors, he said book building allocation were poorly managed that led to a disaster. Source
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