ABU DHABI — Insurance House, an Abu Dhabi- based firm, will go public to raise capital within this quarter, marking the signs of economic recovery.

“All regulatory approvals have been secured from the concerned authorities for the establishment of Insurance House, and the launch of the IPO,” the company said on Saturday.

Chief Executive Officer of the Stocks and Commodities Authority (SCA) Abdullah Al Turaifi recently hinted that at least four companies will raise capital on the stock markets this year.

According to media reports, a capital- based realty Eshraq Properties will sell shares as early as within this month.

However, Axiom Ltd, a mobile phone retailer in Dubai canceled plans in December to raise at least $100 million, citing market conditions and liquidity.

The last share sale in the country was in March 2009 by Abu Dhabi’s Green Crescent Insurance Co, a provider of health insurance products.

The financial viability of the IPOs is brighter as the UAE economy is set to expand 3.2 per cent this year up against an estimated 2.4 per cent in 2010, according to the International 
Monetary Fund.

The share indices went into tailspin world-over, eversince, the economic turmoil surfaced in September 2008, as panicked investors had no option but to sell their shares. Finance House, which is listed on Abu Dhabi Stock Exchange, will be “the principle founder with an approximate 40 per cent share of the total capital,” the company said in an announcement.

“Out of total capital of Dh120 million, the founder’s stake of Dh54 million, equal to 45 per cent of the capital, was deposited in local banks, while the remaining 55 per cent of the capital, i.e. Dh66 million, will be offered for public subscription,” the company said in 
an announcement.

Basam Ramahi, general manager at Abu Dhabi-based Shuaa Securities welcomed the announcement, which will boost the capital market activities. “I can tell you that several IPOs are in planning phase to be floated later this year,” he said, adding “it is good time to raise funds from the capital markets.”

Investors, who lost their hard earned money in the two-years of the financial meltdown would certainly be interested in an IPO especially when it has backing of reputable business houses and that business model is attractive, Ramahi opined.

“The insurance sector shares are doing fairly good on the markets, which means the new IPO will have far more prospects than others”, the share 
analyst said.

However, a bumper subscription to the issue would largely depend upon the business plan of the company.

The Insurance House is part of Abu Dhabi’s Finance House, which has “good track record” of financial performance. On January 26, Finance House board had proposed a dividend of 15 and bonus shares of 10 per cent, as the full year profits rose 2.40 per cent year-on-year to Dh115.1 million.

Basam said Finance House’s backing will add value to new insurance firm’s prospects to attract over-subscriptions.

Mohammed Abdulla Alqubaisi, Insurance House Founders Committee Chairman, who is also the chairman of Finance House described the launch as “another major milestone for Finance House as a group, and shall compliment our range of financial products and services”. 
—haseeb@khaleej@khaleejtimes.com