Abu Dhabi Ports rose as much as 17% on its trading debut after a 4 billion dirham ($1.1 billion) share sale, underscoring the strong demand for new listings in the Middle East even as deals from the U.S. to Europe struggle.
The port operator climbed to 3.75 dirhams on Tuesday, up from the offer price of 3.20, before paring gains to 3.61 by 1:10 p.m. in Abu Dhabi. The company, controlled by Abu Dhabi sovereign wealth fund ADQ, sold 1.25 billion shares.
The Middle East enjoyed a boom in initial public offerings last year, as rising oil prices and an easing of coronavirus restrictions fueled investor hunger for equities. Bankers are expecting that to continue in 2022, even as spiking volatility causes companies in other markets to postpone deals.
Abu Dhabi, the wealthiest of the United Arab Emirates’ seven sheikhdoms, saw its IPO market rebound to life in 2021 after a four-year lull. It has offered sweeteners that include flexibility on the minimum stake size required for share sales and promises to reduce or forgo listing fees.
In December, the emirate launched a 5 billion dirham-IPO fund to invest in private-sector companies looking to list on the bourse.
Many logistics companies, including port operators, have benefited from surging demand for freight and goods during the pandemic, with consumers spending less on travel and services such as restaurants.
The pandemic also threw shipping schedules into chaos, resulting in long lines of vessels trying to enter ports. The supply-chain bottlenecks have rattled global trade and will last until at least the end of this year, chief strategy officer Ross Thompson said in an interview.
AD Ports last year handled a record 45 million tons of general cargo volumes, up 50% from the previous year. “Twenty-twenty for us was a record year, 2021 was a record year, there’s no reason why we don’t see that continuing in the future,” said Thompson.
Read more: S&P Says Abu Dhabi Ports’ Listing to Boost Financial Buffers
The company has recently become more active in capital markets, selling a debut bond of $1 billion in April and signaling it has plans to issue more debt.
AD Ports might decide to issue green bonds or bonds linked to Environmental, Social and Governance aims, said chief financial officer Martin Aarup in an interview. “It’s a key focus for us in terms of being ahead of the curve.” However, the company isn’t in a rush to issue more bonds since it’s raised 4 billion dirhams through the listing, he said.
The firm has a number of expansion projects ongoing at Khalifa Port, where it added a new container terminal in 2018. “We believe that the group is well positioned to accelerate its local and international expansion plans in 2022 and beyond,” Chief Executive Officer Mohamed Juma Al Shamsi said in a statement.
ADQ will remain a majority shareholder in AD Ports with a 75% stake. The wealth fund transferred stakes of 22% in logistics firm Aramex and 10% in UAE-based contractor National Marine Dredging to AD Ports prior to the sale.