Dubai's Daman Investments launches UAE IPO Fund amid flurry of public offerings

The new investment vehicle will invest in upcoming IPOs and companies that have listed in the past two years

Trading momentum has picked up pace on the DFM after a flurry of IPOs this year. EPA
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Daman Investments, a Dubai-based investment manager, has launched a new fund that will invest in UAE initial public offerings, to capitalise on the flurry of IPO activity in the country's capital markets.

The Daman UAE IPO Fund will provide institutional and professional investors with exposure to UAE companies, with the potential for significantly higher returns than the UAE's equity indices, Daman said in a statement on Monday.

With the UAE government’s continuing programme of selling stakes in state-owned entities adding to the capital markets momentum and improving liquidity, the new fund offers strong capital appreciation potential, the company said, without stating the size of the investment vehicle.

“Since its inception, Daman Investments has been a pioneer in creating differentiated product offerings that have created long-term value for our clients,” Shehab Gargash, chairman of Daman Investments, said.

Building on its legacy, the company has launched the UAE IPO Fund, which will allow investors to capitalise on “a period of strong capital market activity”.

The fund, which expects to distribute dividends on a quarterly and annual basis, will also invest in companies that have listed over the past two years and have “not yet reached their full capital return potential”, Ahmed Khizer Khan, chief executive at Daman, said.

Unlike capital markets in the US and Europe that have slumped amid inflation woes and fears of a looming recession, the UAE has experienced a flurry of IPOs, with various government-owned companies listing their shares.

Dubai last year announced plans to list 10 state-owned companies to increase the size of its financial market to about Dh3 trillion ($817 billion).

The emirate also plans to set up a Dh2bn marketmaker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.

Salik, which is Dubai’s sole toll operator, is the latest state enterprise to sell its shares in the emirate.

The company raised Dh3.735bn from its IPO on the Dubai Financial Market earlier this month in a deal that was more than 49 times oversubscribed across all tranches.

Total gross demand rose to $50.2bn, showing the strong appetite for shares of state entities.

The Salik deal followed the IPO of the Dubai Water and Electricity Authority. The utility raised Dh22.41bn from its public float, making it the largest IPO in the Middle East and Europe since Saudi Aramco went public in 2019.

Tecom, the operator of business districts in the emirate, also made its debut on the DFM in early July, having raised Dh1.7bn from its IPO a month earlier.

Since its inception, Daman Investments has been a pioneer in creating differentiated product offerings that have created long-term value for our clients
Shehab Gargash, chairman, Daman Investments

In Abu Dhabi, Burjeel Holdings is the latest company to float its shares on the Abu Dhabi Securities Exchange. The healthcare provider will sell 11 per cent of its share capital, it said on Monday.

A string of IPOs on the Arab world's second-largest stock market has significantly improved liquidity and foreign investment on the ADX, anchoring it as one of the world’s best-performing equity markets in 2021.

Its market value climbed to Dh2.25 trillion ($614bn), as of the close of trading on Friday.

Listings on the Abu Dhabi market this year include Borouge and Abu Dhabi Ports Group.

Nine companies listed on the bourse last year, including Adnoc Drilling, Fertiglobe, Alpha Dhabi and Yahsat.

Last year, Abu Dhabi also announced a Dh5bn IPO fund to help encourage and support private companies to list on the local stock market.

“Leveraging on the strong macro-outlook and structural reforms … we launched the Daman UAE IPO Fund to be part of the economic growth story of the UAE,” Mr Khan said.

Updated: September 26, 2022, 11:00 AM