LOGIC Consulting: IPO scene in UAE has matured strongly over the years

09 September 2024 Consultancy-me.com

In recent years, a growing number of companies have gone public on exchanges in the UAE, driving a growing local IPO scene. A report from LOGIC Consulting looks into the market’s growth and prospects going forward.

Overall, the MENA region has mirrored the global trend with a growth in IPO announcements. The UAE and Saudi Arabia have seen the most IPOs in the region, though the UAE stands out as having the most success in this area.

The success of IPOs in the UAE is indicative of heightened investor confidence in the country’s economy and the strength of local business. In addition, the UAE government has played an instrumental role in providing the right infrastructure for all parties involved – businesses, financial advisors, investors, and sovereign wealth funds.

The UAE government has also begun actively encouraging state-owned companies to go for IPOs under a strategic initiative aimed at attracting foreign investments and boosting efficiency. “Notable companies like Emirates Global Aluminum and Abu Dhabi Ports are exploring public listings, signaling a shift towards a more market-driven economy,” commented Seifallah Rabie, partner at LOGIC Consulting.

“Last year, the Dubai government announced plans to list several state-owned enterprises on the Dubai Financial Market (DFM). Simultaneously many private companies, including family-owned businesses and SMEs, are increasingly considering IPOs as a viable option for raising capital.”

The first Emirati company to go public in 2000 was Emaar Properties, a leading real estate company that played a key role in putting Dubai’s now world-famous façade on the map. Many more enterprises followed suit since then, and more recently, lifting the IPO scene to record activity in 2022. While 2023 was a bit quieter in comparison, the current is set for a rebound.

LOGIC Consulting: IPO scene in UAE has matured strongly over the years

Emaar Properties was the first ever Emirati company to go public

A boost to capital markets

The success of the UAE’s IPO market has provided a major boost to the overall capital market, said LOGIC Consulting, helping the UAE cement its status as an economic powerhouse among its MENA peers. Total market capitalization currently stands at about $773.2 billion, according to the report.

In 2023, IPO’s in the UAE were able to raise a total of $536 billion across a variety of different sectors. Emirati enterprises welcomed around 63,000 new investors in just 2023, 47% of whom were foreign. Another 19,000 institutional investors were registered with the Abu Dhabi Securities Exchange (ADX), with 43% being foreign.

“The UAE has been making significant strides in diversifying its economy beyond oil dependence, driven by a commitment to sustainable growth,” said Rabie.

“By channeling investments into innovation and infrastructure, the UAE is establishing itself as a global hub for trade and investment. This diversification strategy is also reflected in the country's robust IPO movement, as businesses seek to capitalize on the UAE's evolving economic landscape, offering new opportunities for investors and contributing to a more resilient and dynamic economy.”