Saudi money is back in UAE just in time for Dubai IPO bonanza

Intensifying competition with the United Arab Emirates hasn’t stopped Saudi investors from pouring cash into Abu Dhabi’s listing boom, with Dubai’s anticipated deals also in their sights.
The historically friendly relationship is showing signs of fraying, as Saudi officials pressure international companies to set up shop in Riyadh rather than in Dubai. The UAE responded by easing business and cultural restrictions to position itself as the more attractive place to live and work.
That hasn’t curbed Saudi investor demand for the flurry of initial public offerings the UAE capital Abu Dhabi last year.
Saudi buyers got meaningful allocations in recent deals and will also look at Dubai, according to Christian Cabanne, Bank of America Corp’s head of equity capital markets in Central and Eastern Europe, the Middle East and Africa.
“We’ve now seen more investors from Saudi Arabia invest in the UAE, which is very interesting because we didn’t have that before,” he said. “We talked about it a lot but it never really happened.”
A $9.1bn IPO wave swept through the region last year. The UAE’s commercial hub of Dubai, however, missed out entirely and is seeking to close the gap with Abu Dhabi and local leader Riyadh with a plan to list 10 state-owned companies and boost its shrinking market.
Saudi Arabia benefits from a large retail buyer base and UAE IPOs offer investors a chance to diversify their portfolios. Dubai’s pipeline this year includes its main utility and road-toll collection system Salik.
Dubai Electricity & Water Authority was planning to meet with investors including sovereign and pension funds as soon as this week, Bloomberg News reported. Salik has picked Moelis & Co. as financial adviser for its IPO, people familiar with the matter have said.
Relying on Saudi investors has backfired for the UAE before. Emaar Development PJSC’s listing in 2017, Dubai’s latest major IPO, was nearly derailed at the last minute by sweeping arrests in Saudi Arabia that led local investors to abandon commitments on the last day of the sale.
Still, the rivalry between Riyadh, Dubai and Abu Dhabi is unlikely to impact the vast majority of listings, said George Traub, managing partner at corporate finance firm Lumina Capital Advisers. “There’s a very healthy competition which bodes well for the future.”