UAE’s IPO drought is likely to ease from this year :MENA

Dubai: The IPO activity in the UAE has remained subdued for the past few years,
which can be broadly attributed to two factors — firstly and the most important one is the lack of favourable market conditions, and secondly the unfriendly regulatory  requirements and procedures. Historically, the UAE stock markets, which have had a relatively drier spell compared to Saudi Arabia, witnessed a total of 10 companies being listed on respective UAE bourses between 2010 and 2014. However, in the last two years, the region was confronted by the declining oil prices and heightened economic uncertainty, which had a significant impact on the IPO activity in the UAE. As a result, there have only been two new additions since 2015 as most of the prospective companies either decided to shelve or defer their IPO plans because of deteriorating market conditions and dismal performance of recent IPOs.

The companies listed since 2010 were mostly quasi-government companies, which
suggest that capital markets are still elusive of attracting private companies. Moreover, the UAE bourses do not reflect the dynamics of the economy, as the banking, real estate and construction sectors dominate the overall market capitalisation, which undermines other economic sectors, especially in light of UAE’s long term diversification strategy. Hence, there is a lack of peer comparison for private companies operating in other economic sectors, which might be another reason for the subdued IPO activity in the past few years.

Given the dismal IPO activity seen over the past few years, the UAE government
recognised the importance of reviving capital market activity, which has led to a host
of measures being introduced since 2015. For example, the UAE has circulated new
draft IPO regulations for feedback from stakeholders, setting requirements
increasingly in line with international exchanges. In 2015, it issued the New Federal
Commercial Companies’ Law, under which businesses are able to float as little as 30
per cent of their shares than the earlier set threshold of 55 per cent, and permit
companies to conduct IPOs by selling existing shares rather than issuing new ones.
Additionally, it now allows IPO prices to be determined by book building — obtaining
indicative bids from fund managers rather than through a fixed-price evaluation
method.

The UAE is also at an advanced stage of drafting a foreign investment law
that would allow 100 per cent foreign ownership of businesses outside free zones in
strategic sectors, thereby indicating the region’s openness to international
investment. The earlier 55 per cent requirement didn’t lead to many, especially
family-owned, businesses to initiate listing process, but the current lower rate is
expected to make it more appealing for business owners to participate in a float as
they can retain control of the company. Most notably, there is a tangible sentiment
that investment from private equity (PE) players, equity alliances with industry peers,
and fixed-interest debt are all suitable alternatives to public flotation for the trading
families of the UAE, at least as long as the current uncertainty continues.

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Funding squeeze hastens take-off of non-bank lending in Middle East : Al Masah Capital

DUBAI (Reuters) –

Middle East investment companies are ramping up their lending to businesses, providing a lifeline for small and medium-sized firms struggling to secure finance from banks that tightened credit after a suffering rise in bad loans. Industry participants estimate non-bank lenders in the region could provide around $1 billion over the next three to five years, including secured loans, mezzanine debt, preferred shares and convertible loans and bonds.

That’s a small slice of the global industry; private debt funds, the other name for non-bank lenders, distributed $58 billion in capital worldwide in the first half of 2016, according to financial data firm Preqin. But a growing number of Middle Eastern borrowers are considering non-bank finance, alongside other “shadow banking” options such as private equity, venture capital funds and peer-to-peer lending.
In the Gulf, “low oil prices have caused lower liquidity in the market, and combined with more onerous capital requirements for banks, this has led to a decline in the financing available to mid-market companies,” said Mirza Beg, managing director of private debt at Waha Capital.

“This situation is creating more opportunities for private debt players like us.”
United Arab Emirates-based asset management firm Waha branched into private debt last year, offering conventional and sharia-compliant finance for healthcare, logistics consumer and business services firms in the Middle East, Africa and Turkey.

Many banks in the Gulf have tightened their policies on lending in the past two years as low oil prices and sluggish economic growth aggravate non-performing loans.

Some banks have also become less able to lend because of pressure on their balance sheets from new regulations, including global Basel III requirements from the Bank of International Settlements and the International Financial Reporting Standards Board’s IFRS 9 accounting rule.

Lack of catalysts, upcoming Eid holiday keeping investors away : AL MASAH CAPITAL (MENA)

Dubai: Trade values in the UAE’s equity markets dwindled even further on Sunday as
a lack of catalysts coupled with the summer lull kept investors away. The Dubai Financial Market (DFM) index slid 0.61 per cent to reach 3,602.55, with only Dh169 million worth of trades in the market, 40 per cent lower than the last trading session.

“Lack of catalysts coupled with the summer lull and the approaching Eid break dominated trading activities across the regional markets. Along with the end of earnings season, regional markets have been in a very thin range, trading volumes declining, and no major macro news affecting stocks’ prices,” a note from  Al Masah Capital said. Markets in the UAE will be closed from August 31 to September 3 for the Eid Al Adha holiday. On the Dubai bourse, GFH Financial Group accounted for 23 per cent of the market’s total trade value, with its share prices falling 3.26 per cent to reach Dh1.78.

“GFH shares alone accounted for about a quarter of trade on DFM. Investors were
expecting the company to distribute dividends, but there really hasn’t been much
clarity or transparency from [GFH] regarding that, which is why we’re seeing that
drop in share prices,” said technical analyst Osama Al Ashry. In two separate statements to the bourse, GFH said it is still awaiting regulatory approvals regarding dividend distribution. Al Ashry said he expected GFH share prices, however, to reach their resistance level of Dh2.5, and possibly touch Dh3, in the fourth quarter of 2017.

Chef And Entrepreneur Roberto Segura On Turning Passion Into A Profitable Hospitality Business

Disruptive innovation is a common theme across many, if not all, industry sectors nowadays. As in many other cases, the culinary world has also witnessed its rules being rewritten, with many chefs from around the world building their own enterprises to conquer the dining sector. So, how are they going about doing this? We asked some chefs who have embarked on such entrepreneurial endeavors in the MENA region to tell us their stories. Here’s what Roberto Segura, chef and co-founder, 3 Hospitality, had to say.

Disruptive innovation is a common theme across many, if not all, industry sectors nowadays. As in many other cases, the culinary world has also witnessed its rules being rewritten, with many chefs from around the world building their own enterprises to conquer the dining sector. So, how are they going about doing this? We asked some chefs who have embarked on such entrepreneurial endeavors in the MENA region to tell us their stories.

How do you turn a passion for food into a profitable business?

“For me, passion drives a hospitality business, and without this key factor nothing will go well, from the kitchen, which is the heart of the restaurant, all the way to the front of house and bar. The second point is to set your prices properly, but in order to be profitable you don’t need to be expensive. People in the market are looking for great quality at an affordable price and that is exactly what we offer. Thirdly, you need to respect the local palate, you have to understand the city’s local tastes and what food makes Dubai a unique culinary destination.1500182090_WAKA RESTAURANT-2

As a chef you sometimes just want to cook what you like, but here you have to mix a bit with the iconic ingredients that people like in Dubai. Apart from being one of the partners, my position in our restaurants is always to be involved in every single aspect of the business. Although the kitchen is my comfort zone, I can often be seen outside serving tables, making cocktails in the bar or talking to the guests, because this is what I love to do.”

Al Masah Capital’s investment report : MENA Region

A current venture report by Al Masah Capital , an option resource administration and consultative firm concentrating on the MENA area, said the UAE economy is “cruising along” while others in the locale battle to look after development, and it additionally noticed that Dubai is developing at a quicker rate than Abu Dhabi in the midst of the new reality of low oil costs.

This report surveyed the financial segment of the significant nations in the MENA imagesdistrict in the third seven day stretch of July.

“We used essential news suppliers and factual sources like Reuters and Bloomberg while playing out our own investigation to fabricate perspectives and desires identifying with the economy and markets,” Shailesh Dash, business visionary and author of Al Masah Capital, told the Gulf News Journal.

Dubai made increases throughout the week, ascending by 2 percent on the back of Emaar, Air Arabia, Dubai Parks and Resorts and Aramex having solid week after week cost execution, while Emirates NBD beat profit desires humbly by 6 percent and rose by 1.4 percent for the week.

Abu Dhabi was flattish expanding by only 0.3 percent for the week with Abu Dhabi Commercial Bank (ADCB) revealing solid profit coming in 12.8 percent above appraisals, giving the stock motivation to ascend by 3.6 percent for the week.

Throughout the week finishing July 21, Saudi Arabia’s market was around 0.9 percent, headed to a substantial degree by a larger part of organizations detailing Q2 profit underneath advertise desires. Be that as it may, Saudi Arabia Mining Co, Saudi Hollandi Bank, Saudi Electricity, Dar Al Arkan Real Estate, Saudi Ceramic and Yamama Cement all fundamentally astonished the market with their quarterly profit discharges. On a positive note, Al Marai, and Yanbu National Petrochemical Co beat expert gauges by 19 and 66 percent separately.

“Saudi Arabia’s primary trigger is the cost of oil, and its descending pattern is influencing its economy and therefore working organizations in the KSA,” Dash said. “The petrochemical business experiences specifically a weaker oil cost and also the managing an account division as it moderates the amount of assets streaming into banks and the capacity to make credits is confined to some degree. This resounds all through the nation and monetary scene, thwarting financial advance with respect to when the oil cost was close $100 a barrel.”

With respect to Egypt, since the finish of June, the market has seen a get, developing by more than 10 percent, driven by gossipy tidbits about further cash depreciation. Be that as it may, the investigation time frame saw money markets decrease by 1.9 percent with Ezz Steel revealing Q2 Earning Per Share (EPS) in the red.

Palestine VC Firm Ibtikar Fund Raises US$2.5 Million From Regional And Global Investors

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Financial support, especially in the early stages of business lifecycle is a missing link most startups in Palestine (and perhaps in many parts of the Middle East) suffer from. Helping make things better for Palestine’s entrepreneurs in this regard is Ibtikar Fund, an early-stage venture capital fund with a mission to “close a critical funding gap between acceleration and VC, and other later-stage investors” for Palestine startups.

And now the VC firm has got a boost in achieving this objective, as it has announced raising an investment of US$2.5 million from the International Finance Corporation (IFC), the Dutch Good Growth Fund (DGGF), and Reach Holding (a Middle East-based global entity headquartered in Palestine) as investors. With this raise, Ibtikar increases its capital to $10.45 million, giving it the ability to invest in more Palestinian entrepreneurs.

“We look for ideas and startups that are scalable, and which serve the MENA region or global need,” declares the website of Ibtikar (meaning innovation in Arabic), which launched in May 2016, and has made 14 investments in Palestinian startups so far, and growing.  “These new investments are a validation of our work over the last two years, and a vote of confidence in our management,” Habib Hazzan, Managing General Partner, Ibtikar said in a statement. “We are glad that the IFC, DGGF and Reach Holding agree with our current investors in the potential of Palestinian startups and welcome them to our fund,” he added.

As per Ibtikar Fund’s investment strategy, laid down in its website, the firm supports companies in two stages- seed and early-stage, and is looking to “invest in highly-skilled and complementary management teams that are willing to take risks and go out of their comfort zones.” At the seed level, the Fund looks for entrepreneurs through local accelerators,  and it also remains open to make Series A investments in its portfolio companies.

Managed by Hazzan and Ambar Amleh, the Fund benefits from the involvement of some of the country’s renowned business executives- its board is chaired by Hashim Shawa, Chairman and General Manager of the Bank of Palestine (the fund’s anchor investor), and includes Zahi Khouri, chairman and CEO, National Beverage Company.

While this marks the first investment in Palestinian venture capital and in MENA region overall by DGGF, this is IFC’s first investment in Palestinian ecosystem and the second under its new Startup Catalyst initiative (the first was its support to Flat6Labs Cairo in Egypt). “We believe Ibtikar can play a pivotal role in strengthening the area’s entrepreneurial ecosystem, creating jobs, and attracting more investment,” Mouayed Makhlouf, IFC’s Regional Director in the MENA region, said in a statement.

Global markets ended the week with mixed performances : MENA

A week that was expected to remain positive witnessed downward pressure on Friday post the outcome of ECB and BoJ’s latest meeting. Both the central banks decided to keep the rates unchanged coupled with no plans in sight for tapering stimulus packages/schemes to support the broader economies.

As a result, the global market ended the week with mixed performances, from a slightly positive end for the US to negative trend in European equities. Further, oil prices showed early signs to inching closer to $50 but witnessed downward pressure on Friday to slip back to $47 levels. For the regional markets, performance was in line with the global markets but the reasons were not similar as trading activity was also driven by the second quarter releases by corporates during the week.

UAE markets led the gainers as Dubai and Abu Dhabi recorded gains of 1.0% and 0.8% respectively, followed by 0.8% in Qatar after rising by 6.1% in previous week. Oman was the worst performer as it was down by 2.4% on the back of reports that the economy is continuing to face challenges in light of lower oil prices.

The week ahead might continue to face the resistance seen in the last week on the back of a movement in oil prices, unless second quarter earnings positively surprise the markets.

The IMF expects Saudi’s economy to register close to zero growth in 2017 due to OPEC production cuts, uncertainty over oil prices and structural reforms undergoing to wean itself off of oil.

About Al Masah Capital :
Al Masah Capital is one of the fastest growing alternative asset management
and advisory firms focused on the MENA and SEA regions. Established in
2010 Al Masah Capital provides tailored solutions to a broad investor base,
offering private equity advisory (across Healthcare, Education, Food &
Beverages, Logistics and other consumer driven sectors), asset management,
corporate and real estate advisory as well as public market research services.
With operations in Dubai, Abu Dhabi and Singapore, Al Masah advises
qualifying investors on growth opportunities in 13 focus markets in MENA and
South East Asia.