Emaar Development, the biggest Dubai IPO in 3 years, has worst debut since 2014
Dubai: Geopolitical risk in the Middle East took a toll on the debut of a stock linked to one of the strongest brands investors can find in the United Arab Emirates market.
Emaar Development PJSC, the UAE real estate developer that began trading in Dubai Wednesday, fell 4.3%. That was the worst debut trading day since 2014 among the 10 biggest initial public offerings (IPOs) in the Middle East and Africa over that time span, Bloomberg data shows. The company is the local development arm of Emaar Properties PJSC, a company that’s 30% owned by the government of Dubai and the developer of the world’s tallest skyscraper. It closed 0.4% lower on Thursday.
While the Emaar IPO was fully subscribed within half a day of the issue’s opening on 2 November, neither investors nor bankers could predict the events of the following two days. That Saturday, Saudi Arabia arrested princes, billionaires and ministers as part of crackdown on corruption and blamed Iran for an attempted missile attack on Riyadh’s airport, while Lebanon’s prime minister unexpectedly resigned from Riyadh. Just two weeks later, advisers scrambled to complete the offering in Dubai.
“There is generally a risk-off environment in the region, and that sentiment was reflected in the first day of trading, especially in the beginning of the day. There was this knee-jerk selling,” said Ayub Ansari, an analyst at Securities & Investment Co. in Bahrain. “As geopolitical concerns abate, investors will start looking back at fundamentals, the stock should find support,” adding that that the new stock is one of the best bets in Dubai at the moment.
Emaar Development dropped as much as 7.1% once trading started on Wednesday, before paring losses. The share sale is the largest offering in the emirate since Emaar Malls PJSC raised $1.6 billion three years ago. Emaar Properties finished up 2.6%, trimming a 5% decline in the previous six sessions.