New $500m TNI fund good news for MENA stocks
Posted on 23 September 2009 with no comments from readers
Regional stock markets resume trading today after the Eid holiday celebrating the end of the holy month of Ramadan. It is an auspicious day to launch a new regional stock market fund, and that it comes from The National Investor (TNI) doubly so.
For those with short memories TNI was the small Abu Dhabi investment bank that drove the IPO boom of the mid-2000s in the UAE. In those days subscriptions for IPOs came in at a multiple of the GDP of the UAE, and TNI must have profited more than any other firm from the boom.
Boom to bust
Of course, things eventually got out of hand and TNI stayed batting until the last over. Indeed, this correspondent earned a public rebuke from the then hyper-active CEO of TNI for talking the market down. The market duly crashed and he shut up.
However, that TNI is now raising its colors again is surely significant. The firm is seeding an initial $100 million MENA Blue Chip Fund with $30 million of its own, shareholders and local associates’ cash, and hopes to end up with around $500 million under management.
There is a road show starting in London next week with Geneva and Zurich to follow in October and Tokyo in December.
Other UAE investment firms like Algebra Capital and Shuaa Capital have also looked abroad for investment capital, but it is interesting that TNI is choosing this moment to raise foreign funds for investment in blue chip stocks in the Middle East and North Africa.
Gulf stocks lag
Gulf stock markets have been laggards in the global recovery since this March with oil revenues substantially down on 2008 and the bursting of the property boom. And there is still the prospect of further weakness if a double-dip recession takes stock markets down again.
However, that would only confirm a market bottom, and with oil prices expected to remain firm due to the rise of China and India then the longer term prospects for investors in the region should be very good, especially with proven local experts like TNI to guide them.
Perhaps this time TNI will not have an inside track on every major IPO in the UAE but who knows, history has a habit of repeating itself, and it will be a long time before this correspondent is calling a market top again. Indeed, we have likely not seen the bottom just yet.
