ADNH Catering shares closed flat to the issue price following a disappointing debut in Abu Dhabi on Wednesday after completing its Dh864m (US$235.2m) IPO.

The IPO priced at the top of a Dh0.91–Dh0.96 range and shares briefly touched Dh0.97 before gradually falling to a low of Dh0.94.

A sharp rally in the final minutes of trading on heavy volume took the stock back to the issue price by the close, seemingly as stabilisation manager BHM Capital stepped in.

The use of a brownshoe means the deal size could shrink by up to 10% of the 900m shares sold in the IPO.

Around 145.7m shares changed hands on Wednesday, representing 16.2% of the deal.

Citigroup and First Abu Dhabi Bank were joint global coordinators, and joint bookrunners with Emirates NBD and Abu Dhabi Commercial Bank.

Muted first-day performances have been an issue for the private sector in the UAE this year, though whether this has become a trend will depend on the performance of Lulu Group and Talabat IPOs.

Previous Abu Dhabi Exchange debut Alef Education closed down 12.9% on the first day and remains well below the Dh1.35 issue price at Dh1.18.

Bankers blamed the concurrent US$11.2bn jumbo follow-on offer in Saudi Aramco for sucking up demand, though high allocations to short-term money has also been cited.

In Dubai, supermarket operator Spinneys closed up 4.6% on debut, modest by regional standards, and has traded either side of the issue price since.

In contrast, the privatisation of Dubai parking space operator Parkin saw its shares close up 35% on debut and shares closed at Dh4.05 on Wednesday, nearly double the Dh2.10 issue price.

Two further data points for the private sector will come before the end of the year in the form of supermarket giant Lulu, which on Monday launched an ADX IPO of around US$1.5bn-equivalent, and Delivery Hero spin-off Talabat, expected to launch in Dubai in November.

Bankers on Lulu will be hoping for comparison with Saudi Arabian peers such as Bindawood and Al Othaim, given its larger size and greater Saudi and regional exposure compared to Spinneys. Tadawul is also a larger and more liquid market, typically trading at a premium to the UAE, and has seen a solid track record in private sector performance.

Source: IFR