(Bloomberg) — Investcorp Capital Plc, an investment vehicle backed by the Middle East’s largest alternative asset manager, ended its first day of trading after its $451 million initial public offering in a rare muted debut in the region.
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The company’s shares closed at 2.30 dirhams in Abu Dhabi on Friday, which was in line with the offer price. They had previously risen as high as 2.40 dirhams before falling as much as 4.4% from the IPO price.
The weak performance is due to the IPO being priced at the high end and increased by 12% due to strong demand from international and regional institutional investors. Persian Gulf IPOs have held up well despite uncertainty from the Israel-Hamas war and concerns about higher interest rates.
Other recent major listings in the region soared on their debut, such as Saudi freight company SAL Saudi Logistics Services and oil producer ADES Holding Co, which rose as much as 30%. Investcorp Capital’s debut is the worst for IPOs of at least $100 million in the Middle East in nearly a year since Saudi Aramco Base Oil Co. collapsed in late 2022.
More than half of the offering – $250 million – had been underwritten by a cornerstone investor, a special purpose vehicle that includes about 160 investors from across the Gulf region, including existing Investcorp clients. Volumes are also in focus as Investcorp Capital debuted on Friday, the day all Gulf markets except the United Arab Emirates are closed.
Investcorp Capital, backed by Investcorp Holdings, invests in private equity, real estate, credit and general partner positions in North America, Europe, the Middle East and Asia. Investcorp sold 398.5 million shares in the IPO, the rest being new shares in the company.
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Price stabilization
For the first time in the UAE, the deal features a price stabilization mechanism to stabilize the stock for the first 30 days after listing, which is common practice in many other markets. Because such a mechanism is a gray area under UAE law, two Wall Street banks pulled out of the deal, only to rejoin a few weeks later, Bloomberg News reported.
Investcorp, which owns luxury companies like Tiffany & Co. and Gucci Ltd. was delisted from the Bahrain Stock Exchange in 2021 after nearly four decades due to low trading volumes and a desire to expand faster. It is backed by Abu Dhabi-based Mubadala Investment Co., which acquired a 20% stake in 2017.
Under CEO Mohammed Alardhi, Investcorp expanded internationally and increased its assets under management to $50 billion. Its shareholders include some of the Middle East’s wealthiest royals and business moguls.
Citigroup Inc., Emirates NBD PJSC, First Abu Dhabi Bank PJSC, Goldman Sachs Group Inc. and HSBC Holdings Plc worked on Investcorp Capital’s IPO as joint global coordinators and joint bookrunners. Moelis & Co. acted as independent financial advisor.
(Updates with closing stock price in first two paragraphs)
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