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In recent years, the United Arab Emirates (UAE) has emerged as a hub for Initial Public Offerings (IPOs) in the Middle East. With a rapidly growing economy and supportive government policies, the country has attracted a number of companies seeking to raise capital through the public markets. In this article, we will discuss the recent trends in the UAE’s IPO market, including the types of companies going public, the performance of IPOs, and the regulatory framework governing these offerings.

The UAE has become a hotbed for initial public offerings IPOs, and a growing number of companies, both local and international, have chosen to go public on the UAE’s stock exchanges, including the Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX). This trend has been driven by a variety of factors, including the UAE’s strong economic performance, favorable regulatory environment, and growing investor appetite for new investment opportunities.

The Types of Companies Going Public:

Over the past decade or so, the UAE has witnessed a range of companies going public, from small to large, across various sectors. These include healthcare, technology, finance, real estate, and retail. One notable trend has been the rise of technology companies going public, particularly those focused on e-commerce and fintech. For example, the UAE-based digital payment platform, Network International, went public in April 2018 and listed on London Stock Exchange.

In addition to tech companies, real estate has been another prominent sector in the UAE’s IPO market. Real estate companies such as Emaar Malls (remerged with Emaar Properties in 2021), Emaar Development listed on Dubai Financial Market (“DFM”) in 2014 and 2017, respectively raising significant amounts of capital. These offerings have been particularly attractive to regional investors who are looking to diversify their portfolios.

2022 was a challenging year for IPOs in US and Europe, though on the other hand, we have witnessed a hike in  IPOs  in  the Gulf  Cooperation  Council (“GCC”) region and in  the UAE, which have  weathered the storm of financial turmoil due to the pandemic. We witnessed 7 key IPOs in 2022, namely DEWA IPO, being the largest IPO in Middle East Region, TECOM Group IPO, Salik IPO, Burjeel Holdings IPO, Empower IPO (the largest management cooling system worldwide), Americana IPO (the first ever concurrent offering on ADX and Tadawul), and Taaleem Holding IPO).

Performance of IPOs:

The performance of IPOs in the UAE has been mixed over the years, with some offerings generating strong returns while others have underperformed. The success of an IPO in the UAE largely depends on market conditions, timing, and the valuation of the company.

Another key factor driving the IPO trend in the UAE is the country’s favorable regulatory environment. The UAE has made a concerted effort in recent years to streamline its regulatory framework and make it more business-friendly, in order to attract more foreign investment and stimulate economic growth. The country’s financial regulators, including the Securities and Commodities Authority (“SCA”), have taken steps to reduce the regulatory burden on companies looking to go public, while also ensuring that investors are protected. The SCA has introduced a number of new regulations in recent years to improve transparency and disclosure requirements for IPOs, which has helped to build investor confidence in the country’s stock exchanges.

Regulatory Framework:

The regulatory framework governing IPOs in the UAE is overseen by the SCA and the Dubai Financial Services Authority (DFSA). The SCA regulates the public offering of securities in the UAE, while the DFSA is responsible for overseeing the offerings that take place in the Dubai International Financial Centre (DIFC).

In recent years, the UAE has taken steps to enhance its regulatory framework for IPOs, with a focus on improving transparency and accountability. In 2016, the SCA issued new regulations requiring companies to disclose more information about their operations and financial performance in IPO prospectuses. These new regulations have been well received by investors, who are increasingly demanding greater transparency and accountability from companies.

Conclusion:

Overall, the IPO market in the UAE has been growing in recent years, with a diverse range of companies going public across various sectors. While the performance of IPOs has been mixed, the success of an offering largely depends on market conditions, timing, and the valuation of the company. The UAE has also made significant strides in improving its regulatory framework for IPOs, with a focus on enhancing transparency and accountability. Despite the overall positive trend, the IPO market in the UAE still faces some challenges. One of the biggest challenges is the relatively small size of the market compared to other global exchanges.

By:

Ahmed Ibrahim

Managing Partner

IBRAHIM .N. PARTNERS