NMDC Energy soars 20% on debut after UAE’s largest IPO of 2024
NMDC Energy soars 20% on debut after UAE’s largest IPO of 2024/node/2570968/business-economy
NMDC Energy soars 20% on debut after UAE’s largest IPO of 2024
On the Abu Dhabi Securities Exchange, NMDC Energy’s shares, initially priced at 2.8 dirhams, opened at 3.35 dirhams, reflecting a significant 20 percent increase. File
NMDC Energy soars 20% on debut after UAE’s largest IPO of 2024
Updated 11 September 2024
Reem Walid
RIYADH: The energy division of NMDC Group experienced a remarkable debut as its shares surged 20 percent after raising 3.22 billion dirhams ($877 million) in the UAE’s largest initial public offering of the year.
On the Abu Dhabi Securities Exchange, NMDC Energy’s shares, initially priced at 2.8 dirhams, opened at 3.35 dirhams, reflecting a significant 20 percent increase.
The company, which specializes in engineering, procurement, and construction services for both offshore and onshore clients, surpassed the previous largest IPO of the year, Alef Education Holding Plc’s $515 million offering.
The IPO for NMDC Energy involved the sale of 1.15 billion shares, which were 31.3 times oversubscribed, with total demand reaching 88 billion dirhams, according to a press release.
This strong debut underscores investor confidence in the company’s future and reinforces ADX as a pivotal platform for growth opportunities.
The successful IPO also aligns with ADX’s objective to expand market offerings and foster sustainable economic development in the UAE, according to the press release.
Abdulla Salem Al-Nuaimi, group CEO of ADX, said: “We are pleased to welcome NMDC Energy to ADX, furthering our vision of a dynamic and diversified capital market. With its expertise in the energy sector and innovative track record, NMDC Energy strengthens our market and offers investors access to the UAE’s sustainable growth.”
He added: “The 88 billion dirhams demand for this listing reflects investor trust in ADX and underscores our role in portfolio diversification for our investors and issuer growth. As ADX’s sixth offering this year, it reinforces Abu Dhabi’s commitment to economic diversification, positioning the financial market as a key driver of sustainable development.”
In the first half of 2024, UAE IPO proceeds reached $1.3 billion, a 67 percent drop from last year, with ADX contributing $515 million, or 14 percent, of the total Gulf Cooperation Council IPO funds.
“Today marks a key milestone, not just for NMDC, but also for Abu Dhabi’s energy sector. Following a highly successful IPO, we are proud to list NMDC Energy on ADX and embark on an exciting new path forward,” said Ahmed Al-Dhaheri, CEO of NMDC Energy.
Established in 1973, NMDC Energy — formerly National Petroleum Construction Co. — serves major clients like Abu Dhabi National Oil Co. and Saudi Arabian Oil Co.
Lebanon’s dollar bonds surge following Assad’s departure, but economic challenges persist
Updated 4 sec ago
Miguel Hadchity
RIYADH: A rally in Lebanon’s dollar-denominated bonds a day after Syrian militant groups removed President Bashar Al-Assad from power shows growing optimism for economic and governance reforms in the region, according to an expert.
Makram Makarem, a senior director at Beirut-based Investment and Capital Bank, told Arab News that the prospect of reduced external influence in Lebanon through Iranian proxies in Syria, as well as the weakening of Hezbollah, has boosted investor confidence.
Lebanon’s dollar-denominated bonds surged by 30 percent in 10 days, reaching 13 cents to the dollar on Dec. 9.
At least nine of the country’s dollar bonds, maturing between 2026 and 2037, traded above 12 cents, a significant rise from their average for much of the year.
The 2029 bonds saw the largest increase, rising 2.03 cents to 12.76 cents on the dollar — the highest since December 2022.
Although still significantly below face value, the bonds have rallied multiple times since Israel’s recent military strikes in Lebanon.
“This optimism stems from expectations of reduced political interference and greater focus on governance,” said Makarem.
The financial adviser at the Lebanese institution explained that the bond surge is driven by a combination of geopolitical and economic factors.
The removal of President Assad’s government has disrupted a crucial supply route for Hezbollah, the Iran-backed Lebanese militia designated as a terrorist group by the US.
He pointed out that this, coupled with growing expectations of a breakthrough in Lebanon’s long-stalled presidential election, has improved investor sentiment.
While the outlook is promising, Lebanon’s entrenched corruption and political inefficiencies pose challenges, requiring strong reforms and sustained international support for meaningful progress, he added.
On the economic front, Makarem underlined that ongoing state debt restructuring efforts and historical recovery rates for defaulted bonds, which typically range from 20 percent to 50 percent, “indicate that current bond levels are undervalued, with recovery estimates projected between 20 percent and 30 percent.”
Additionally, rising gold prices — which are positively correlated with Lebanon’s recovery prospects due to the country’s gold reserves — along with restructuring efforts in the banking sector, have raised growth expectations.
“However, sustaining this sentiment will depend on Lebanon’s ability to implement reforms and navigate its entrenched political and economic challenges,” he added.
Since Lebanon defaulted on its international debt in 2020, the nation has endured a severe economic crisis marked by hyperinflation, poverty, and political deadlock. With a caretaker government in place since 2022 and ongoing presidential election failures, significant reforms still need to be made.
The bond rally has laid the groundwork for potential economic recovery by boosting confidence in Lebanon’s financial markets.
“Lebanon’s broader recovery hinges on addressing systemic challenges like hyperinflation, a weak currency, and fragile institutions,” Makarem said, warning that without structural reforms and effective governance, the rally is unlikely to translate into sustained economic improvement.
Despite Lebanon’s dollar bonds nearly doubling from the average, as highlighted by Makarem, they remain almost 50 percent below their post-default highs, reflecting ongoing concerns about the country’s ability to achieve lasting financial stability and implement necessary reforms.
PIF launches Adeera to redefine Saudi hospitality with local brands
Updated 16 min 47 sec ago
Miguel Hadchity
RIYADH: Saudi Arabia is making a significant move to develop its own homegrown hospitality brands with the launch of Adeera, a new hotel management company fully owned by the Public Investment Fund.
This new venture aims to introduce a variety of local hotel brands designed to meet the needs of a diverse range of visitors, from mid-range options to ultra-luxury accommodations.
As Saudi Arabia continues to position itself as a major global tourism destination, the launch of Adeera comes at a crucial time.
According to a press release, the company is poised to unlock new business opportunities within the Kingdom’s hospitality sector by focusing on the unique Saudi experience.
Adeera will work closely with hotel developers to maximize the involvement of the local private sector, creating a platform for the growth of homegrown hospitality brands.
Khalid Johar, co-head of PIF’s Local Real Estate Portfolio, emphasized the significance of the launch. “The timing of Adeera’s introduction aligns perfectly with Saudi Arabia’s expansion in hospitality and tourism. The company has the opportunity to help propel the sector forward by introducing innovative hotel brands, supporting the Kingdom’s growing reputation as a world-class tourism destination.”
Johar also highlighted that Adeera’s distinct focus on Saudi culture and traditions would give the company a competitive edge in a rapidly evolving market. The goal is to create an authentic Saudi hospitality experience that resonates with both local and international visitors, celebrating the Kingdom’s rich heritage while offering world-class service.
The launch of Adeera marks another key step in PIF’s broader efforts to diversify Saudi Arabia’s economy and drive sustainable growth.
The press release noted that this move follows several significant investments by PIF in the tourism and real estate sectors. These investments include the luxury boutique hotel company Boutique Group, which specializes in transforming historic and cultural palaces into upscale boutique hotels; Dan, an agri-tourism company; and Asfar, a tourism investment firm.
Saudi Arabia’s National Tourism Strategy is an ambitious plan aimed at attracting 150 million visitors and generating 10 percent of the country’s gross domestic product from tourism by 2030. PIF’s investments are aligned with this vision, focusing on strategic sectors such as infrastructure, real estate, technology, and renewable energy to help establish Saudi Arabia as a leading global investment hub.
In addition to strengthening local industries, PIF is also focused on fostering innovation, creating employment opportunities, and attracting international investment. Through these initiatives, the fund aims to ensure sustainable economic growth and enhance the Kingdom’s competitiveness on the global stage.
The Kingdom’s hotel sector is already experiencing significant growth. According to recent data from the Central Bank of Saudi Arabia, spending in hotels saw a notable week-on-week increase of 11.4 percent from Nov. 10 to 16, reaching SR399.7 million ($106.4 million).
This follows an 8.5 percent increase in hotel spending during the week of Oct. 13-19, despite a broader decline in point-of-sale transactions, as reported by SAMA.
This upward trend in hotel spending underscores the growing demand for high-quality accommodations and further highlights the potential for continued growth within the hospitality sector.
With Adeera, Saudi Arabia is poised to take a leading role in shaping the future of its hospitality industry, blending the best of modern hotel management with a deep respect for its cultural and historical roots.
Saudi Arabia, UAE banks to post strong credit growth in 2025: Fitch Ratings
Fitch Ratings projected banks in the Kingdom will witness a financing growth of around 12% in 2025
Report said that the gradual execution of giga-projects should continue to underpin banks’ interest
Updated 21 min 40 sec ago
Nirmal Narayanan
RIYADH: Banks operating in Saudi Arabia and the UAE are expected to post strong credit growth in 2025, driven by high crude prices and the expansion of the non-oil economy, according to an analysis.
In its latest report, Fitch Ratings projected that banks in the Kingdom will witness a financing growth of around 12 percent in 2025, about twice the average of the Gulf Cooperation Council region.
The US-based agency added that corporates will account for almost 65 percent to 70 percent of new financing among Saudi banks in 2025.
The analysis echoes similar views to those put forward by Moody’s in November, which predicted that Saudi Arabia’s Vision 2030 initiative, aimed at diversifying the Kingdom’s economy, could accelerate the growth of the banking sector in the country.
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In its report, Fitch Ratings said: “The operating environment for banks in the Kingdom is underpinned by high oil prices and government spending, which support the country’s giga-projects and the Vision 2030 strategy, resulting in solid non-oil gross domestic product growth.”
It added: “Fitch Ratings forecasts real non-oil GDP growth to average a still strong 4.5 percent over 2024–2025, compared to 5 percent over 2022–2023. We expect the sector’s financial metrics to remain strong in 2025.”
The report said that the gradual execution of giga-projects should continue to underpin banks’ interest in this segment, although the current share of giga-project-related financing is minor for most rated banks.
However, the credit rating agency warned that the net foreign assets of banks in the Kingdom could continue to be negative in 2025 due to high-cost domestic term deposits and increased demand for foreign currencies.
Regional outlook
According to the analysis, banks in the Middle East region are expected to maintain sound profitability, solid liquidity, and adequate capital buffers for their risk profiles in 2025, while asset quality should remain stable.
In November, a report released by S&P Global said that banks in the GCC are expected to maintain strong asset quality, profitability, and ample liquidity through 2025 thanks to solid capitalization and well-managed balance sheets.
S&P Global, however, warned that heightened geopolitical tensions and a sharp drop in oil prices could negatively affect the creditworthiness of financial institutions in the region.
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UAE
Fitch said that banks in the UAE will enjoy favorable business and operating conditions in 2025 thanks to high oil prices and increased economic activities.
The analysis added that banks in the Emirates will achieve a loan growth of around 9 percent in 2025, a figure well above the GCC average but slightly below its Arab neighbor, Saudi Arabia.
“We expect UAE banks’ funding and liquidity to remain strong and deposits will continue growing in line with lending. Liquidity will continue to be supported by large government deposits, driven by the sovereign’s solid net external assets position, still-strong fiscal metrics and recurring hydrocarbon revenues,” added Fitch.
Egypt
The report highlighted the growth of the banking sector in Egypt and said that general business and operating conditions for financial institutions in the country are expected to improve next year.
According to Fitch, falling inflation, improved investor confidence, and healthy foreign currency liquidity conditions are some of the major factors that could strengthen the banking sector in Egypt in 2025.
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Bahrain
In Bahrain, credit growth among banks is expected to be reasonable, albeit still modest, compared to GCC peers, at around 4.5 percent in 2025.
“Fitch expects the business environment for banks in Bahrain to remain adequate, underpinned by some operating condition improvements. Lower lending rates should ease pressures on the sector’s corporate loan books, in particular real estate and contracting,” said the report.
The credit rating agency predicted stable asset quality metrics for Bahraini banks in 2025, with lower rates providing relief to corporate borrowers and households and the sector profitability to remain sound.
Kuwait
According to the report, the banking sector’s credit growth in Kuwait is expected to hover between 5 percent and 6 percent in 2025, albeit hindered by still-high interest rates and only moderate real non-oil GDP growth.
The analysis revealed that liquidity among Kuwaiti banks will remain strong next year due to large and stable deposits from government-related entities and gains from high oil prices.
Oman
Fitch revealed that Oman’s Vision 2040 program aimed at diversifying the country’s economy could open more opportunities for banks in the future.
“Oman’s Vision 2040 will provide growth opportunities for banks and ensure a healthy lending pipeline in key sectors of the economy, as well as reduce banks’ reliance on government spending in the long run. However, the absence of a deep capital market limits access for corporates to funding sources other than the country’s domestic banks,” said the study.
The analysis added that liquidity among Omani banks will continue to be supported by stable government and government-related entity deposits, while high oil prices are expected to support the growth in customer deposits.
Qatar
In Qatar, the general business and operating environment for banks are projected to improve in 2025.
The report revealed that the credit growth among Qatari banks could pick up to 5.5 percent next year but will remain below that of Saudi Arabia and the UAE due to their particularly strong operating conditions.
Jordan
In Jordan, the market conditions of banks are expected to remain challenging next year, while the sector will witness a lending growth of 3.5 percent.
“The operating environment for banks in Jordan remains challenging due to below-potential and structurally weak real GDP growth, and high unemployment and geopolitical risks, which negatively affect tourism and exports,” concluded Fitch.
Fitch affirms Saudi Aramco at ‘A+’ with stable outlook
Updated 10 December 2024
Reem Walid
RIYADH: Fitch Ratings has reaffirmed Saudi Aramco’s long-term issuer default ratings at “A+” for both foreign- and local-currency ratings, with a stable outlook, reflecting the oil giant’s strong financial standing and its crucial role in the Saudi economy.
The rating is underpinned by Aramco’s robust financial profile, though it is capped by the rating of its majority shareholder, the Saudi government, which owns 81.48 percent of the company. The Public Investment Fund holds an additional 16 percent. According to Fitch, this structure influences Aramco’s ratings due to the government’s significant stake and control.
Fitch assigned Aramco a standalone credit profile of “aa+,” highlighting its solid financial position. The agency also gave the company a short-term IDR of “F1+,” which is aligned with the sovereign rating.
The affirmation comes after Aramco’s strong performance in 2023, when its total liquid production averaged 10.7 million barrels per day, and its hydrocarbon output reached 12.8 million barrels of oil equivalent per day. This performance outpaced major global peers, including Shell, TotalEnergies, and BP.
In its statement, Fitch noted that Aramco’s rating is constrained by Saudi Arabia’s rating, in line with Fitch’s Government-Related Entities Rating Criteria. This is due to the government’s substantial influence over Aramco, particularly its regulation of production levels in accordance with OPEC+ commitments.
Fitch also emphasized the company’s “Very Strong” governance, reflecting the government’s strategic oversight, including the ability to determine Aramco’s maximum sustainable oil production capacity.
Aramco’s conservative financial management further bolsters its credit profile, with the company’s leverage expected to remain lower than that of other major global oil and gas companies. Fitch also praised Aramco’s sustainable dividend policy, which is set to include a base dividend of $81.2 billion in 2024, with additional performance-linked payouts.
“Under our oil price assumptions, we expect Saudi Aramco’s capital expenditures and base dividend payments to be broadly covered by operating cash flow. We also assume that the company has the flexibility to adjust its dividend commitment if oil prices decline or if capital expenditures exceed current forecasts,” Fitch said.
In 2024, Aramco is expected to pay total dividends of $124 billion, including $43.1 billion in performance-linked payouts, reflecting record cash flows from 2022-23. Fitch forecasts a reduction in capital expenditures from $50 billion in 2024 to $35 billion by 2028, with annual dividends projected to decrease to $82 billion over the same period.
The agency also highlighted Aramco’s critical role in Saudi Arabia’s economy, noting the company’s importance as a key provider of feedstock for power generation and other essential industries, in addition to its vast reserves and production capacity.
Fitch anticipates that the Saudi government would provide support if needed, although the company’s strong financial position has historically not required direct state intervention.
On a national level, Fitch assigned Aramco a long-term rating of “AAA (sau)” based on its substantial reserve base, strong profitability, and market position.
The company’s standing was also compared favorably to other prominent Saudi entities, such as Saudi Basic Industries Corp. and Saudi Electricity Co., within Fitch’s National Scale Rating framework.
Robust manufacturing sector lifts Saudi industrial index by 5%: GASTAT
Updated 10 December 2024
MIGUEL HADCHITY
RIYADH: Saudi Arabia’s industrial production index rose by 5 percent year on year in October, driven by robust growth across key economic sectors, official data showed.
According to figures from the General Authority for Statistics, the index also edged up 0.4 percent month on month, reaching 106.9 points.
The mining and quarrying sub-index, which includes oil production, recorded a slight 0.4 percent annual increase, with oil output ticking up to 8.97 million barrels per day from 8.94 million a year earlier.
Despite the annual increase, monthly performance for this sector remained stable with no significant changes recorded between September and October.
The manufacturing sector continued its robust growth, recording a 12.4 percent year-on-year increase in October. This expansion was primarily driven by a 32.6 percent surge in the production of coke and refined petroleum products compared to the same month of 2023.
Saudi Arabia’s industrial production, central to Vision 2030, is driving economic diversification through manufacturing and non-oil growth.
Other contributors to the sector’s growth included the manufacture of chemicals and chemical products, which rose by 0.6 percent, and food products, which grew by 4.8 percent.
On a month-to-month basis, the manufacturing sub-index advanced by 1.1 percent, driven by a 2.7 percent increase in coke and refined petroleum products and a 0.2 percent rise in chemicals and chemical products.
Other manufacturing activities exhibited varied growth rates. The manufacture of non-metallic mineral products increased by 1.8 percent year-on-year and 0.8 percent month-on-month.
Basic metals manufacturing expanded by 4.3 percent annually and 1 percent compared to the previous month.
Paper and paper product manufacturing saw an 11 percent annual rise and a 1.1 percent monthly increase, while the production of electrical devices grew by 9.2 percent year-on-year and 0.1 percent month on month.
Furniture manufacturing posted notable growth, rising 14.4 percent annually and 0.5 percent monthly. Other economic activities within the manufacturing sector recorded a 4.3 percent year-on-year increase and a 0.3 percent monthly uptick.
In the utilities sector, the sub-index for electricity, gas, steam, and air conditioning supply rose by 6.2 percent year on year. Similarly, the sub-index for water supply and sewerage as well as waste management activities climbed by 8.4 percent over the same period.
These sectors also recorded positive monthly growth. The sub-index for electricity, gas, steam, and air conditioning supply rose by 0.9 percent compared to September 2024, while the water supply, sewerage, and waste management sub-index increased by 1.4 percent.
In October, oil-related activities expanded by 5.4 percent year on year and 0.5 percent month on month.
Non-oil activities also showed solid growth, rising 4 percent annually and 0.3 percent monthly. This highlights Saudi Arabia’s commitment to diversifying its industrial base as part of its Vision 2030 initiative.
The IPI tracks changes in industrial output, using the International Standard Industrial Classification framework to monitor sectors such as mining, manufacturing, utilities, and waste management.
