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UAE: More IPOs are in the pipeline after the success of Adnoc Gas

Big private sector companies, family-owned businesses and state-owned enterprises are planning to float their shares after the government’s initiative to encourage public listings to broaden the capital markets of the country

The UAE is expected to see more initial public offerings (IPO) this year as big private sector companies, family-owned businesses and state-owned enterprises are planning to float their shares on the UAE bourses, experts say.

Analysts and market insiders said the Abu Dhabi Securities Exchange and Dubai Financial Market may see an active IPO line-up this year following the government’s initiative to encourage public listings to broaden the capital markets of the country.

Referring to latest IPO announcement of Presight AL Holding, a G42 company, and successful launch of Adnoc Gas subscription, they said at least one big public offering from state-owned enterprises and one announcement from private sector group are expected by next month.

Vijay Valecha, chief investment officer, Century Financial, said the UAE government has shown great interest in promoting family-owned businesses to list shares on the nation's stock exchanges.

Dh5 billion fund

Referring to the recent launch of the Dh5 billion ($1.36 billion) fund to boost public listings is an example of these efforts which has resulted in 11 IPO deals expected in 2023 as private companies recognise the benefits of being publicly listed.

Additionally, he said the successful IPO of healthcare giant Burjeel and fast food operator Americana, which were largely subscribed will nudge other companies to follow suit and enjoy benefits of being listed.

“The positive long-term economic prospects of the country means private-owned business will increasingly need quick access to raise funds for expansions and new projects. Being listed on ADX and DFM is a sure shot way to engage with domestic and international investors,” Valecha told Khaleej Times.

Lulu, Pure Health

To a question, he said some big private sector companies and family-owned businesses are expected to float IPOs either on the ADX or the DFM this year.

“We are likely to see multiple big-ticket IPOs such as Abu Dhbai-based LuLu Group, one of the largest supermarket chains in the Gulf, operating 239 stores in 11 countries and has sourcing operations spanning 23 countries including the US, the UK, Spain, Turkey and China. This move is expected as the retail conglomerate plans to expand its operations across the Middle East,” he said.

Additionally, he said IHC is targeting for a first quarter IPO of its Pure Health is one of the largest integrated healthcare networks in the UAE and its IPO is likely to be a highly anticipated one.

Active pipeline

Shailesh Dash, a Dubai-based financier and entrepreneur, said the UAE IPO market like seems to remain pretty active in the first half of this 2023 as well.

“Many of the public sector related entities, subsidiaries of semi-govt bodies particularly in Abu Dhabi could be planning their public offerings as per the market and various media sources. Success of Adnoc Gas IPO should work as a positive push towards these planned IPOs,” Dash told Khaleej Times.

“Finally, we might be seeing some family-owned businesses also coming to the market this year. Because of the economic activity particularly boom in real estate sector and various other positive developments in the UAE capital markets should remain active unlike many other parts of the world which have been affected by inflation and rising interest rates,” he said.

SPACs option

Thomas Mathew, vice-president for investment strategy and research at Kamco Invest, said the UAE is expected to sustain an IPO activity throughout the year.

“We wouldn’t be surprised to see the number of IPOs in the UAE this year ousting 2022’s 12 listings, if secondary market performance and valuations remain stable,” Mathew told Khaleej Times.

Moreover, he said sector participation could be diversified and routes such as special purpose acquisition companies (SPACs) could continue to be a good hunting ground for investors looking at unique smaller sized business models to enter the market.

“The UAE government should remain active in 2023 in listing state-owned names to exchanges and providing additional support to private companies that are looking to execute an initial public offering,” he said.

“Case in point is the announcement last year that Abu Dhabi launched the Dh5 billion Abu Dhabi IPO Fund in such an effort to strengthen the ADX, which will be reportedly overseen by the Supreme Council for Financial and Economic Affairs and managed by the Abu Dhabi Department of Economic Development (ADDED), and will invest in 5-10 private companies per year, with a focus on SMEs, and with a target ticket size of between 10 per cent to 40 per cent of the float,” Mathew elaborated.

Ahmed Negm, head of Market Research Mena at XS.com, said the Abu Dhabi stock market could be benefitting strongly from the success of Adnoc Gas IPO which has been able to attract investors’ interest.

“The new listing could also fuel higher liquidity and more demand for other local stocks, helping to lift prices,” he said.

— muzaffarrizvi@khaleejtimes.com