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Mar 03, 2023

The week in investor relations: ADNOC Gas IPO raises record sum, ESG backlash poses material risk and Chinese investors fear economic policies 

Our pick of the IR stories from around the web you might have missed this week

– ADNOC Gas set the final IPO price on the higher side of its range, at 2.37 Dhiram (Dh) per share, implying a market cap (at time of listing) of around $50 bn. According to Gulf News, the book-building generated orders of Dh450 bn ($123 bn). The Dh2.37 a share. The decision to price closer to the top of the range followed ‘significant demand from both local and international investors’. It is already the biggest IPO anywhere in the world so far this year and demand for the retail offering alone amounted to more than $23 bn. That is more than 58 times oversubscribed – the highest ever for ‘retail tranches in a MENA IPO to date’.

– Wall Street’s largest asset managers, private equity firms and brokers warned that a backlash against sustainable investing is now a material risk, in filings that show how acrimony over ESG principles have become a perceived threat to profits. The Financial Times (paywall) reported that a dozen big US financial companies including BlackRock, Blackstone, KKR and T Rowe Price added language to annual reports filed in the past month cautioning that pressures such as ‘divergent views’ or ‘competing demands’ on ESG investing could hurt financial performance. The statements come in response to a campaign against what opponents describe as ‘woke capitalism’ that has drawn support from such high-profile Republican politicians as US Senate minority leader Mitch McConnell and Florida Governor Ron DeSantis.

– Meanwhile, Bloomberg (paywall) reported that the asset management industry is overlooking what promises to be a major new ESG risk: biodiversity. A fresh analysis by nonprofit ShareAction found that only 10 percent of the asset managers it surveyed say they have a dedicated biodiversity policy covering all their portfolios. ‘Even the top-performing asset managers in the survey have a biodiversity blind spot, often failing to take into account the protection of important habitats such as forests, rivers and oceans when managing their investments,’ said Claudia Gray, head of financial sector research at ShareAction.

The study, which looked at firms representing a combined $77 tn in client assets, comes roughly two months after the COP15 agreement put biodiversity firmly on the investing map.

– According to MarketScreener, Chinese investors were trading in and out of hot stocks at a record pace before the country’s annual parliamentary meetings, pointing to heightened market uncertainty around economic policies and leadership changes, analysts said. Such wavering is unusual, they said, as shares typically rise before the National People’s Congress session on hopes of economic stimulus. But this year’s congress, starting this week, comes as investors worry about geopolitics, economic policy and regulation, China makes its biggest government reshuffle in a decade and President Xi Jinping tightens his grip.

Money managers said they are waiting for evidence the economy is getting back on track as well as policy details from the congress. Rebounding corporate profits as China reopens after hard Covid-19 restrictions should boost the market in coming months. 

– Companies in Great Britain that want access to the EU single market should invest in Northern Ireland, senior Tory MP Andrea Leadsom said. Reporting on the latest developments on the Brexit deal, BBC News said Northern Ireland firms will continue to be part of the single market under UK Prime Minister Rishi Sunak’s deal. If businesses on the mainland wanted access to the single market they should ‘invest in Northern Ireland,’ said Leadsom, adding that it would be ‘fantastic’ for the region. ‘It’ll be a win-win for Northern Ireland and for GB businesses,’ added the former business secretary.

On a visit to a Coca-Cola factory in County Antrim, Sunak said that if his deal, known as the Windsor framework, on new post-Brexit trading rules is implemented, ‘Northern Ireland [will be] in the unbelievably special position – unique in the European continent – in having privileged access, not just to the UK home market, which is enormous, but also the European Union single market.’ 

– In crypto news, three US senators wrote to Binance, the world’s largest crypto exchange, asking for details about its money-laundering controls and accusing Binance of being a ‘hotbed of illegal financial activity’, reported CoinDesk via the The Wall Street Journal. According to the letter to Binance CEO Changpeng Zhao, the group requested details of the company’s balance sheets, internal procedures and any communications about alleged efforts by Zhao to limit compliance. An excerpt from the letter said Binance and related entities ‘have purposefully evaded regulators, moved assets to criminals and sanctions-evaders and hidden basic financial information from its customers and the public.’ The exchange is reportedly bracing itself for significant fines for past conduct.

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