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Al Ansari Exchange should list with a good uplift, expert says

High yield will ensure strong participation in the company's share sale

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 to 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 levels 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 be, that 7.7 per cent yield will look outstanding,” Yasin said. Thus, the upside for the longer-term investors is positive and in short-term they will be collecting their dividend, he added.