UAE IPO market set for major upswing

The initial public offering (IPO) market in the UAE expects to get a significant fillip in 2021 following the launch of the Nasdaq Dubai Growth Market for small and medium enterprises, market analysts said.

Also driving the IPO activity surge in the UAE after a lull 2020 across the GCC will be the Dubai Expo in the second half of this year, analysts at Kamco Invest said.

The number of IPOs across the GCC, both on regional and international exchanges, declined to seven issuances in 2020, from 12 issuances in 2019. Proceeds for 2020 from GCC issuers both on regional and international exchanges reached $1.87 billion from $29.04 billion in 2019.

Analysts said the Nasdaq Dubai Growth Market, a new market under the umbrella of Nasdaq Dubai launched in October 2020, is a landmark initiative seeking to help young businesses and SMEs achieve the next phase of their expansion by raising capital through an IPO.

The Growth Market is set to play a key role in the future of capital-raising and the channeling of investment to enterprising companies to enable them to succeed during all phases of the business cycle supported by their Dubai listing, according to market experts.

“In terms of sectors, issuances of newer consumer linked businesses, and asset light models that focus on digitization, technology disruption and healthcare that gained market share in 2020 from the impact of Covid-19, could continue to warrant higher valuations. Nevertheless, higher activity in 2021 would still depend on secondary market performance and volatility, the unwinding of the impact of Covid -19 including the effectiveness of the vaccine, and global geopolitics,” analysts at Kamco said.

A similar upswing in IPO activity is anticipated across the GCC. After witnessing the landmark IPO of Aramco in 2019, the GCC IPO market remained active in 2020, despite the Covid-19 led market sell-off witnessed in early 2020, as issuances picked up in the second half of 2020.