Al Ansari should list with a good uplift, expert says
Al Ansari Exchange should list with a good uplift on the secondary market, a senior analyst said.
“Al Ansari is a very good growth story. It has a good market share. It has been able to demonstrate that it is successful across many years and many crises that came through,” Mohammed Ali Yasin, capital markets expert and adviser, told Khaleej Times in an interview. The increase in the retail tranche of the Al Ansari Exchange initial public offering (IPO) will ensure more investors will get a chance to participate in their growth story, he added.
Al Ansari Exchange on Friday increased the retail tranche of its IPO to 56.25 million shares from the initial level of 37.5 million, raising the share of the retail to 7.5 per cent from 5 per cent. Accordingly, the qualified investor tranche will be allotted 693.75 million ordinary shares, down from 712.5 shares, the company said.
“Retail is a core player in any IPO. The initial allotment of 5 per cent is lower than the usual 10 per cent in other IPOS. They should be rewarded so that they can retain the interest in continuing to participate in the upcoming IPOS,” Yasin said.
A major factor that is attracting the investors to the Al Ansari IPO is the high dividend yield. With the share price range of Dh1-dh1.03, and the company promising distribution of Dh600 million in dividend, the yield will come to about 7.7 per cent. “In a couple of years, when the interest rates go down, as everybody expects them to, 7.7 per cent yield will look outstanding,” Yasin said.
Thus, the upside for the longerterm investors is positive and in short-term they will be collecting their dividend, he added.
According to the IPO prospectus, Al Ansari Exchange handled approximately 2.6 per cent of global outward personal remittances in 2021. According to an EDC Report, as at 31 December 2021, Al Ansari Exchange held 38 per cent of the exchange house outward personal remittance market and has historically grown at a much faster pace than the UAE personal remittance market.
In 2021, Al Ansari Exchange had a 14 per cent market share in the corporate remittances through exchange houses market.
For the year ended 31 December 2021, the UAE had Dh175 billion in outward personal remittances with Dh108 billion being attributed to exchange houses and Dh67 billion being attributed to banks. The overall outward personal remittances market is expected to grow to Dh211 billion by the year ending 31 December 2027, with Dh138 billion being attributed to exchange houses and Dh73 billion being attributed to banks.
Approximately 41 per cent of the total digital outward personal remittances in 2021 in the UAE were was conducted through Al Ansari Exchange’s digital platforms, according to the EDC Report.