Bourses' great power comes with great responsibility

Richard Stockdale, board member and president of the Chartered Institute for Securities & Investment; and Mayur Pau, Mena IPO leader at Ernst & Young, speaking at the inaugural Arab IPO Summit in Dubai on Tuesday.

The first Arab IPO Summit, which kicked off in Dubai on Tuesday, drew participation of senior officials from capital markets, stock exchanges, investment banks and companies for discussions on the latest trends in the region and regulations on listings.
Discussions at the event, organised by UMS Conferences, also focused on the latest developments, challenges and investment opportunities in the regional financial market.
Speakers pointed out that stock exchanges in the GCC have a responsibility to educate companies about going public.
Richard Stockdale, board member and president of the Chartered Institute for Securities & Investment, spoke on the subject of corporate governance related to initial public offerings at the forum.
"Governance is an integrated, well-practised and adhered to system underpinning quality management. A successful IPO flows from an intricate, interlinking, skilled and choreographed dance of at least seven specialist practitioners, all in the service of the company," said Stockdale.
"A successful IPO enhances the prospects of the company, investors, practitioners, regulators and the jurisdiction. Good governance is the vital common denominator that bolts the success together," he said.
Mayur Pau, Mena IPO leader at Ernst & Young, said IPO activity in first half 2015 was driven by several companies from Egypt and Saudi Arabia encouraged by positive market sentiment and regulatory reforms in the region.
"We have seen fluctuating market conditions in Mena, driven largely by global factors and fluctuating oil prices, which have resulted in several companies deferring IPO plans and waiting for the right time to go to market," said Pau. "Timing and being IPO-ready are critical to take advantage of the window of opportunity, which is typically short, as part of the IPO process. The importance of being prepared cannot be underestimated."
The forum also saw an exclusive panel discussion on importance of IPOs for organisational and capital growth with participation from regulators and authorities like the Dubai Financial Services Authority, or DFSA, the Abu Dhabi Securities Exchange and the Egyptian Exchange, among others.
Brad Douglas, director of markets at the DFSA, commented on the significance of IPOs as an important event in the lifecycle of any company. He spoke about the various benefits of IPOs such as access to initial and ongoing capital, incentivising employees through share schemes, managing for succession events, raising a company's profile and generally broadening a shareholder base.
Rashed Al Balooshi, chief executive officer of the Abu Dhabi Securities Exchange, said IPOs are undeniably one of the most significant events in the life cycle of any company as it expects higher economic growth, thus seeking more financing in order to fund capital investments.
"The liquidity created by going public provides owners, founders, and shareholders with an opportunity to collect on their investment, accordingly creating stronger capital and robust growth opportunities," he said.
"Current market conditions should not act as obstacles facing market activity and development," said Dr Mohammed Omran, chairman of the Egyptian Exchange. "Stock exchanges must create opportunities to overcome the internal and external challenge."
Fahima Al Bastaki, senior vice-president and head of business development division at the Dubai Financial Market, said stock exchanges in the GCC have a responsibility to educate companies about going public and encouraging them to do so.
Majd Maaitah, managing director for securities and funds administration services at National Bank of Abu Dhabi, said companies considering IPOs should prepare for becoming a public corporation much earlier.
During a session on "Strategy Implementations Pre- and Post-IPO", Maaitah said companies should perform a number of critical tasks before going public. These included reviewing their fundamentals and evaluating alternative options. Building the right management team, business processes and infrastructure, and establishing a corporate governance structure were also cited as crucial.
- issacjohn@khaleejtimes.com

• MENA