UAE: Quality IPOs of high-growth firms coming to local stock markets

The UAE stock markets are now witnessing initial public offerings (IPOs) of quality public and private sector entities, industry executives said on Wednesday.

While speaking at the Capital Market Summit in Dubai on Wednesday, Gokul Mani, managing director and head of CEEMEA ECM at JPMorgan, said some high-growth and quality companies are coming to the market through public listings.

Samer Deghaili, co-head of investment banking for MENAT at HSBC, said the Dubai Financial Market (DFM) index was heavily concentrated on real estate and finance a couple of years ago, but now it is much more diversified. “Dewa IPO reflected the diversity. There are high growth opportunities that reflect the growth of Dubai,” he said, adding that Dubai is an incubation hub for a lot of technology companies and are promising opportunities coming ahead.

Christian Cabanne, managing director and head of CEEMEA ECM at BofA Securities, said Dubai and Abu Dhabi have launched many successful IPOs including high government assets.

“Activity on the regional exchanges has been dominated in Dubai, Abu Dhabi and Saudi Arabia. We are starting to see more quality companies listing in the UAE and that is tremendous for Dubai Financial Market and Abu Dhabi Securities Exchange,” he said during the panel discussion on the topic of “Mena Capital Markets Outlook 2024: Trends, Challenges, and Opportunities.”

The UAE and other Gulf markets saw a flurry of IPOs over the past two years, both from the public and private sectors. Industry executives expect this trend will continue in 2024-24 due to strong demand as witnessed with heavy oversubscriptions of various IPOs. Some of the major IPOs that hit the local markets over the past few year were Dewa, Parkin, Salik and Adnoc Group subsidiaries among others. All of these IPOs were heavily oversubscribed by both retail and institutional investors.

Rudy Saadi, managing director and head of Mena equity capital markets at Citi, added that regional IPOs are very much in line with international standards. He also called for promoting secondary markets.

Finlay Wright, head of equity markets solutions for Middle East and Asia at Rothschild & Co., said a wider range of issuances from firms with high cash flows are coming to the market and that is what investors are looking for. “Issuances are coming from companies that have strong local presence and that gives confidence to international investors,” he added.

Prasad Chari, managing director for equity capital markets at Emirates NBD Capital, said there is a lot of liquidity and international investors are coming into this region also because there is a strong local regional demand. “Strong regional demand for IPOs gives comfort to first-time investors also. This region is attractive, people are moving and investing here, and it translated to an attractive stock market,” said Chari.

He added that exchanges, regulators, governments and stakeholders are working together to develop a stock market which is not happening elsewhere and that gives comfort to investors.

• Business