Dual listings between the Middle East and Asia are expected to become a new trend as investment flows between the two regions rise, according to bankers.
The first such deal is already in the works. Olam Group Ltd., one of Asia’s biggest commodity traders, is planning to list its agribusiness unit in its home market of Singapore as well as Saudi Arabia in what it says would be the first listing of a global company in the kingdom.
The Saudi stock exchange has been particularly active in seeking to foster international ties, signing pacts with both the Hong Kong and Singapore bourses this year to cooperate in areas such as cross listings. The Persian Gulf’s initial public offerings market remains a bright spot after last year’s boom, drawing international investors amid a global listings drought.
“There is a growing interest among Abu Dhabi and Saudi Arabian shareholders for their internationally based companies either to grow into the Middle East or expand their customer target market into the region and ultimately to list in the Middle East,” said Samer Deghaili, HSBC Holdings Plc’s regional co-head of capital financing and investment banking coverage.
While the complexity of dual listings is unlikely to lead to a flood of such deals, a successful Olam Agri float could open a pathway for some firms.
Companies from Saudi Arabia and the United Arab Emirates may also be keen to capitalize on their significant export market into Asia, Deghaili said. “Dual listings in both regions will provide access to some Asian investors who want to diversify into other regions and gain exposure to the high-growth Middle East economies,” he added.
Middle Eastern firms, meanwhile, have been looking eastward. The Public Investment Fund, Saudi Arabia’s wealth fund, opened an office in Hong Kong last year and has been investing in Asian companies, from South Korea’s Kakao Entertainment to Chinese gaming company VSPO.
“There are lots of Middle East investors taking more of an interest in Asia. And where is the growth opportunity? It’s going to be in Asia and it will be for the long term, 10-20 years. For these reasons, I think that the flow could be very strong,” said Udhay Furtado, co-head of ECM, Asia Pacific at Citigroup Inc
Other Chinese companies are expanding in the Middle East as President Xi Jinping pushes for closer ties in the region.
China International Capital Corp. is planning to expand in both the United Arab Emirates and Saudi Arabia. Beijing-based Asian Infrastructure Investment Bank opened its first overseas office in April in Abu Dhabi, the UAE’s capital.
“Many Chinese corporates are interested in stepping into the Saudi market for strategic partnerships and high-quality investors, which may lead to listings at a later stage,” said Barry Chan, head of Asia and Australia, for CICC.
--With assistance from Filipe Pacheco.