UAE needs clear and efficient methods to launch IPOs :: GN
Tens of thousands of Saudis with no bank accounts in the UAE approached exchange houses and banks for cheques or drafts in the last few days to subscribe to shares in Dana Gas.On the small point of raising the price for a check, what's the problem? The buyer preferred that to the alternative of queuing. Instead of the inefficient waste of time in line we have the check issuer gaining some of the return that would have gone to Dana if it had charged more for the IPO. The interesting question is why did Dana set the IPO price so much lower than buyers were willing to pay?
"I don't think exchange houses can issue cheques or drafts based on existing rules but many exchange houses have merrily issued them regardless, accepting cash from GCC nationals and charging an exorbitant fee," an Abu Dhabi-based financial analyst said.
"We know some banks have made enormous gains issuing up to 1,000 cheques per day and charging anything between Dh300 and Dh1,000 for one cheque or draft. Saudi nationals particularly were willing to pay any amount to get a cheque and pay for the shares of Dana Gas."
Bankers were divided on whether it was proper to accept cheques issued by exchange houses.
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Mass confusion also surrounded exchange houses and the UAE Exchange Centre's branches in Deira and Bur Dubai found it necessary to call the police to control the crowds.
"It is high time some clear rules and regulations are put in place for IPOs. Otherwise, the mad frenzy of thousands queuing up and the ensuing confusion will continue. What the UAE needs is clear, modern and efficient methods of launching IPOs," said the analyst.