00:00Welcome back to Horizons Middle East and Africa. We're now turning to Abu Dhabi, which has spent years building one
00:07of the Gulf's fastest growing stock markets through a wave of blockbuster IPOs, only to now take one of its
00:14biggest companies private.
00:15A unit of the newly created sovereign wealth fund Limad is moving to buy out minority investors in Abu Dhabi
00:22National Energy Company, or Taka, the $81 billion utility giant.
00:27For more on the deal, we're now joined by Bloomberg's Middle East equity capital markets reporter Laura Gardner Cuesta. Laura,
00:36good to have you on. Twice in less than a week. It's an honor.
00:40Why has this happened? So I think it's better understood as part of the broader Abu Dhabi restructuring that's happening,
00:48right, with the creation of Limad, the new sovereign wealth fund under the crown prince.
00:52It's been absorbing a lot of the key assets, so ADQ, Etihad, Abu Dhabi ports, and now Taka. And I
00:59think what this gives them is more flexibility to be able to pursue deals under Taka, which is obviously like
01:04a key strategic utility without the scrutiny of public markets.
01:08And I think the point about capital markets development, at this point, there's only less than 2% of Taka
01:14that's listed. So it's really such a small free flow. It's tightly held stock.
01:18So I think it's less meaningful than, you know, if you delisted like an adnog drilling or something like that.
01:25Yeah, yeah, of course. But does this speak to a wider trend that we might see, or is it a
01:31one-off?
01:31So I think there's not been an indication. Obviously, like, it's a huge company that they're taking private, right, so
01:36we shouldn't ignore that. But I think from Abu Dhabi's perspective, they haven't really indicated that there's a change in
01:44their strategy, right?
01:45In fact, over the past few years, they've been listing a number of companies that are also strategic, like a
01:50lot of the adnog units.
01:51They've actually also been doing follow-ons, so they've been very conscious about getting a lot of these stocks in
01:56the index, so increasing the free flow, getting more analyst coverage, very conscious about investor relations.
02:02This year has been quite slow in equity capital markets, understandably so, because obviously we've got the conflict and everything.
02:08But I think at least from what Abu Dhabi has signaled, there's no change in strategy. One final point I'd
02:15say is that market participants have been saying that there's still some work to do, not just in the stock
02:20exchange, but in the Gulf in general.
02:22I think there's a lot of companies that still have quite small free floats, and again, perhaps more analyst coverage
02:29could be done in some of these stocks.
02:31But overall, I think this doesn't necessarily indicate a wave of delistings now.
02:35Okay. Laura, last week you mentioned to me that you guys are pretty busy at the desk.
02:41Now, we haven't seen the same amount of IPOs flood the market as we had in previous years for the
02:46reasons you rightfully have just mentioned.
02:49But without divulging too much about the work that you do, what is the expectation for ECM activity in the
02:54region over the next six months?
02:56So this first half of the year has been extremely slow.
02:59We did have one big IPO from Oman that priced last week. We'll list likely this week.
03:06But we spoke to a few bankers who've told us, despite the slow start, there's still an expectation and companies
03:15are getting ready.
03:16There's a few companies in Saudi that are getting ready for IPOs.
03:20And I think it's just a question of you need a bit more stability, but the pipeline is still there.
03:25We've also got some companies in quieter markets like Qatar and Kuwait that are getting ready to list.
03:30But I think everyone wants to see the first big deal do well and trade well, and then that will
03:35probably reopen.
03:36We'll see you next time.
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