Turkish companies plan Dubai initial public offerings

06 April 2014

The two companies plan to list on Nasdaq Dubai soon

Two Turkish companies are planning to launch initial public offerings on Nasdaq Dubai, Fathi Ben Grira, chief executive officer of UAE-based brokerage firm Menacorp, tells MEED.

The two companies will have a total listing value of $300m. One of them is considering a single listing, while the other will also seek a listing on the Istanbul Stock Exchange.

“We’re increasingly seeing interest from Turkey in listing in the UAE. When [companies] look for access to regional and international markets they look to Dubai as a preferred hub,” says Ben Grira.

“We’re also seeing another trend, of UAE-based companies that listed abroad - in London or any other major international bourse – considering a listing here in order to tap into local liquidity. It’s a cash-rich region so it makes sense to also come to your home market and raise money here.

“When the market went down, local investors had to reallocate their exposure. Now the money is coming back home.”

He adds that investors have more confidence in the stability of UAE markets following improved regulation limiting the amount of debt in the system.

Firms listed on Nasdaq Dubai

Source: Nasdaq Dubai

At the beginning of 2014, the UAE introduced regulation capping the amount of leverage brokerages can provide investors at 100 per cent of their original investment, while at the time of the financial crisis many were giving out 500 per cent debt. That left many investors, brokerages and banks with heavy losses when the markets collapsed.

Regulation allowing brokerages to exercise a margin call – allowing the brokerage to sell a stock if it has dropped 300 per cent compared to its original purchase price – will prevent account holders from racking up massive market losses.

“These measures are aimed at limiting the risk profile. A 1 to 1 ratio is extremely conservative, so the good news is that people are investing with cash – similar to what’s happening in the real estate market,” says Ben Grira.

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