$100m Nano IPO fails on DIFX, but Ajman Bank offering popular

No reason for the abandonment of the Nanodynamics IPO was given in a statement to the exchange. But this was to have been the first listing of a US company on the DIFX and in a high technology area that appears not to have appealed to local investors.

Shares in the other recent DIFX IPO, DP World have also been falling recently and that will not have helped investor confidence. And the DIFX is a dollar-denominated exchange and dollar investments are not popular in the UAE at present due to the possible imminent revaluation of the dirham.

On the other hand, the more traditional UAE IPO for Ajman Bank is reckoned to be heading for a massive oversubscription. There are 550 million of its ordinary shares open for public subscription at Dhs1 each. The stock has a minimum subscription of 2,000 shares and is open to UAE and non-UAE investors.

Ajman listing

Ajman Bank will be listed on the Dubai Financial Market during the second quarter of 2008. But not only are the shares priced in dirhams and not US dollars, because they will be traded on the DFM and not the DIFX, but Ajman Bank is in the popular field of Islamic finance and not high tech.

Indeed, Ajman Bank will be the first Shariah bank incorporated and headquartered in the emirate of Ajman, with a business model that has proven successful in other emirates.

CEO Yousif Khalaf ambitiously wants the bank to become the one of the country's preferred financial services brands. Ajman Bank already has 25 per cent of its shares held by the Government of Ajman, in addition to 20 per cent held by financial institutions and private investors. HSBC Middle East is acting as financial advisor and lead manager to the bank.

Day One profits

It would appear that UAE investors have voted with their check books. They still like the old-style IPOs with the one dirham shares and the chance to enjoy big profits on Day One of trading, albeit with the distribution of shares so heavily weighted by oversubscription that the reward barely justifies filling in the form, let alone taking a bank loan.

Perhaps this is just not the time for a more ambitious IPO like Nanodynamics which had withdrawn from a Nasdaq IPO recently and thought it might get a better reception in Dubai.

Stock markets are acting far more globally these days and IPOs are being pulled all over the world as bear markets and recession talk undermines investor confidence. After the DP World IPO on the DIFX last autumn there was talk about a series of bigger IPOs to come but those hopes now seem to have been somewhat premature.

See also:
Nano IPO is big news for the DIFX