DUBAI/ABU DHABI - Abu Dhabi is hoping to fast-track at least $5 billion of stock market listings by state-backed companies next year before Saudi Aramco's planned $100 billion IPO dominates investor demand.
Like neighbouring Saudi Arabia, Abu Dhabi is restructuring its industrial sector, hoping to lure foreign investors with privatisations after lower energy prices depleted its coffers.
This could result in at least five large listings including Abu Dhabi National Oil Co (Adnoc's) fuel distribution unit, aluminium-maker EGA, industrial conglomerate Senaat and Abu Dhabi Ports, government and banking sources said.
Bankers had pitched for the Abu Dhabi Ports IPO, but no decision has been made and the company has said there are no immediate plans for listing.
The IPOs could raise at least $5 billion, several of the sources said, exceeding money raised through listings in the United Arab Emirates over the last five years, according to Thomson Reuters data. A total number of 13 IPOs have raised $4.49 billion since 2012.
Bankers said the companies hope to complete their IPOs before Saudi Arabia's IPO of its crown jewel Saudi Aramco either in late 2018 or early 2019 as part of a wider multi-billion dollar privatisation programme.
"The timing for all of this is now and, if at all possible to achieve, ahead of the IPO of Saudi Aramco and the upgrade of MSCI Saudi Arabia to emerging market status," Sanyalaksna Manibhandu, head of research at First Abu Dhabi Bank, said.
Government-owned companies in Abu Dhabi have been told to manage budgets efficiently and control spending and possibly raise their own finances for expansion to make them less reliant on the state, a source close to the government said.
"Abu Dhabi is taking bold measures to kickstart the markets and boost investor confidence by pushing government related entities to sell shares and list publicly," an Abu Dhabi-based senior bank executive who has advised on deals there said.
CONSOLIDATION
At the same time, Abu Dhabi-based companies spanning sectors such as banking, insurance, services and healthcare are also expected to go through more consolidation, the sources said.
Last year Abu Dhabi merged its two sovereign wealth funds, Mubadala and IPIC, while National Bank of Abu Dhabi and First Gulf Bank created one of the largest banks in the Middle East and Africa.
"When we were a very young country, you could have multiple companies and you basically had to grab your domestic market share. Now it's time to reach the size, where we need to export our services, export our business," Sabah al-Binali, a UAE-based investor, said.
Abu Dhabi is using tougher economic conditions to push through reforms that would have been harder to implement in previous years, when higher oil prices boosted its revenue.
"The good old days of the state bearing the weight of spending and providing subsidies because of rich resources is over. That model is outdated," an Abu Dhabi-based banker said.
"The private sector has to bear the burden too now, something Abu Dhabi has realised."
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