Within 18 months of leaving his trading job to open a lunchtime eatery at the Dubai financial center in 2011, Nabil Al Rantisi was back: selling stocks and rebuilding one of the city’s largest brokerages.
“I saw my window of opportunity,” Rantisi, managing director of Mena Corp Financial Services LLC, said in a March 9 telephone interview from Dubai. “Things started picking up in September 2012. By December, they were looking better, and then really started taking off in the second quarter of last year.”
The world’s fourth-best performing stock market and a revival of public offerings are prompting banks and brokerages to renew growth plans in Dubai after many cut teams during the crisis. Goldman Sachs Group Inc. (GS) is restarting equity sales in the region, two people familiar with the matter said March 7, while billionaire Mikhail Prokhorov’s Renaissance Capital is recruiting for a new Middle East equities business.
“We’ve definitely turned a corner from companies shrinking equity brokerages to hiring again,” Mohammed Ali Yasin, who heads a team of brokers as managing director of NBAD Securities LLC. in Abu Dhabi, said in a March 10 telephone interview from the city. “Our first choice is to find the talent which is still active in the market and didn’t leave during the crisis.”
Goldman Sachs is hiring Veer Ramlugon from Bank of America Merrill Lynch for equity sales in Dubai, the people said, while Renaissance Capital is appointing Ahmed Badr, Credit Suisse’s head of MENA equities in Riyadh, to lead its regional equities business, two people with knowledge of the matter said March 5. NBAD is also taking Ahmed Shehada from QNB Financial Services, two people familiar said last week. He’ll run institutional brokerage and advisory services, one of the people said.
Companies are taking advantage of the surging markets to revive or plan share sales, breaking a five-year drought of initial public offerings in the local market. IPOs in the six-member Gulf Cooperation Council raised about $1.1 billion last year, compared with $15.4 billion in 2007 before the global financial crisis, data compiled by Bloomberg show.
Emaar Properties PJSC (EMAAR), developer of the world’s tallest tower, said March 15 it expects to raise as much as $2.45 billion in the secondary offering of a 25 percent stake in its retail unit. Emirates Reit, the U.A.E.-based real estate investment trust, plans to raise at least 500 million dirhams ($136 million) for acquisitions and investments in an IPO on Nasdaq Dubai.
Dubai’s economy expanded about 4.9 percent in 2013, four years after it was rescued from near default with a bailout from neighboring Abu Dhabi. Dubai yesterday agreed with Abu Dhabi and the Central Bank of the United Arab Emirates to refinance $20 billion of Dubai’s debt at a fixed interest rate of 1 percent as it seeks to restore investor confidence.
The U.A.E. was raised to emerging-market status from frontier by index provider MSCI Inc. in 2013, paving the way for higher foreign investment from May. Dubai’s benchmark index has more than doubled over the past 12 months, buoyed by the real-estate and banking industries. The cost of insuring Dubai’s debt against default was 200 basis points on March 14, almost a fifth of the 2009 figure.
“The outlook until year end is positive,” Nayal Khan, head of institutional sales and trading at Naeem Holding in Dubai said in e-mailed comments. “We’ve got the MSCI inclusion coming up, renewed talk on the IPO pipeline, possible M&A activity and the positive outlook on earnings. All of this is positive for sentiment and ultimately underlying valuations.”
Abu Dhabi’s Senaat, which owns companies including National Petroleum Construction Co., is seeking approval from the emirate for an IPO this year, two people familiar with the matter said last month. It hired HSBC Holdings Plc (HSBA) and JPMorgan Chase & Co. (JPM) for a sale on the Abu Dhabi Securities Exchange.
RenCap, as the Russian bank is known, and Goldman Sachs are focusing on Dubai after rivals Morgan Stanley (MS) and Credit Suisse shifted regional trading business to Saudi Arabia about 18 months ago. The kingdom’s stock market is more than twice the size of that of the U.A.E’s and investors such as Passport Capital’s John Burbank have predicted authorities will loosen restrictions on foreigners directly investing in the country.
RenCap is planning several more hires across sales-trading and research in Dubai and expects to have a “full team” on the ground by June, Benjamin Samuels, global head of equities at the bank, said in an e-mailed response to questions. A Goldman Sachs spokeswoman in London declined to comment.
Still, the number of “active and functioning” brokerages in the U.A.E. remains about half the number at the end of 2008, according to the Securities & Commodities Authority website, while the rapid increase in asset values is reviving memories of the property and stock market bubbles before the 2009 crash. Prices for mid-range apartments in Dubai rose 43 percent last year, according to Cluttons LLC data on Bloomberg.
BlackRock Frontiers Investment Trust Plc, a $297 million fund run by the world’s biggest asset manager, said last month that it “substantially reduced” its holdings in the U.A.E. because of concern of increased speculation by retail investors.
Mena Corp’s Rantisi recalls the days after the bubble burst. He left his job as director of brokerage at Rasmala Investment Bank Ltd. in Dubai in June 2011 after the company, which had a research venture with Royal Bank of Scotland Group Plc, moved away from retail brokerage. He then helped set up the 1762 deli, named after the year in which the sandwich is said to have been created, before joining MENA in mid-2012.
He’s now on the expansion trail, seeking to hire as many as four brokers to cover institutional trade in Egypt, Kuwait and Saudi Arabia after recruiting 35 retail traders since 2012. Finding people, he says, is getting harder as the good times return.
“Now there’s competition from other houses also trying to hire,” he said. “When the market was depressed and companies were letting employees go, we didn’t find any resistance.”