Investcorp Capital Plc, an investment vehicle backed by the Middle East’s biggest alternative asset manager, ended its first day of trading flat after its $451 million initial public offering in a rare muted debut in the region.
Shares in the company closed at 2.30 dirhams in Abu Dhabi on Friday, the same as the offering price. They had earlier climbed to as much as 2.40 dirhams before falling as much as 4.4% from the IPO price.
The lackluster performance comes after the IPO had been priced at the top of the range and upsized by 12% on strong demand from international and regional institutional investors. IPOs in the Persian Gulf have held up well despite the uncertainty from the Israel-Hamas war and concerns about higher interest rates.
Other recent major listings in the region have soared on debut, such as Saudi cargo firm SAL Saudi Logistics Services, and oil driller ADES Holding Co which jumped as much as 30%. Investcorp Capital’s debut is the worst for IPOs raising at least $100 million in the Middle East in almost a year, since Saudi Aramco Base Oil Co.’s slump at the end of 2022.
More than half of the offering — $250 million — had been taken up by a cornerstone investor, a special purpose vehicle including about 160 investors from across the Gulf, including existing Investcorp clients. Volumes are also in focus as Investcorp Capital debuted on Friday, the day all markets in the Gulf are closed except in the UAE.
Investcorp Capital, which is 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, while the rest were new shares from the company.
Price Stabilization
In a first for the United Arab Emirates, the deal has a price stabilization mechanism to steady the stock for the first 30 days after listing, a common feature in many other markets. Because such a mechanism is a gray area under UAE law, two Wall Street banks dropped off from the deal only to rejoin a few weeks later, Bloomberg News reported.
Investcorp, which has backed luxury firms such as Tiffany & Co. and Gucci Ltd., delisted from the Bahrain stock exchange in 2021 after almost four decades due to low trading volumes and a desire to expand faster. It’s backed by Abu Dhabi’s Mubadala Investment Co., which acquired a 20% stake in 2017.
Under Executive Chairman Mohammed Alardhi, Investcorp has expanded internationally and grown its assets under management to $50 billion. It counts some of the Middle East’s wealthiest royals and business moguls as its shareholders.
Citigroup Inc., Emirates NBD PJSC, First Abu Dhabi Bank PJSC, Goldman Sachs Group Inc. and HSBC Holdings Plc worked on the Investcorp Capital IPO as joint global coordinators and joint bookrunners. Moelis & Co. acted as independent financial advisor.
(Updates with closing share price in first two paragraphs)