UAE IPO boom to continue amid foreign investment and competitiveness push

Abu Dhabi Securities Exchange will further expand as more markets are added to its Tabadul network, chief executive of International Securities says

Ayman Hamed, chief executive of International Securities, says the company has seen strong growth in its turnover. Photo: International Securities

The UAE's momentum of initial public offerings will continue for a couple more years, as the country presses forward with measures to boost foreign investment and economic development that enhance its competitiveness, the chief executive of an Abu Dhabi-based securities broker has said.

The surge in IPOs has been the main catalyst supporting the performance of equity markets, and the listing of companies from diverse sectors such as utilities, logistics and health care has also added more depth, Ayman Hamed of International Securities told The National in an interview.

“If the spate of IPOs in the UAE continues the way it has … over the past few years, we will see more inflows coming in from foreign and regional institutions, and will also encourage more and more retail participation in the market,” he said.

Middle East IPOs raised more than $23 billion in 2022 from 48 listings, compared with $7.52 billion raised from 20 offerings in the previous year.

That was the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.

Abu Dhabi accounted for 14 per cent of all listings worldwide in the first quarter of 2023, an indication of the strength of its capital markets amid a challenging global IPO market, consultancy EY said in the latest Global IPO Trends report.

The UAE capital attracted $3 billion worth of listing proceeds in the first quarter of this year, placing it third worldwide, with Adnoc Gas raising about Dh9.1 billion ($2.5 billion) from the sale of a 5 per cent stake.

“If you look at the 2022 stock market performance in the GCC, ADX [Abu Dhabi Securities Exchange] was the top performer in the region in terms of the size of the IPOs as well as in terms of the index performance,” Mr Hamed said.

Over the past few years, the market turnover on the ADX has surged.

In 2020, the average daily market turnover was in the range of Dh200 million to Dh300 million. Currently, it is in the range of Dh1 billion to Dh1.5 billion, according to Mr Hamed.

International Securities started dealing in IPOs in March 2020 at the start of the Covid-19 pandemic. The broker's transactions with IPOs yielded encouraging results in the form of higher investor participation and turnover, he said.

A subsidiary of Abu Dhabi-listed International Holding Company since 2019, International Securities was previously known as Integrated Securities and was part of Shuaa Capital.

In November 2019, IHC acquired Shuaa Securities and Integrated Securities was rebranded as International Securities.

“Over the years, the number of clients we manage grew to surpass 25,000, comprising local, international, institutional and retail investors,” Mr Hamed said.

Its institutional clients include family offices, sovereign wealth funds, private banks, and regional and international fund managers.

“Since 2021, our turnover has been the highest in the UAE. Currently, our market share exceeds 60 per cent in terms of the total turnover combining both ADX and DFM [Dubai Financial Market] markets,” he said.

The company's trading volumes on the ADX and the DFM jumped to a combined Dh570 billion in 2022, from Dh15 billion in 2019.

Going forward, ADX’s depth and breadth will further expand as more markets are added to its Tabadul network, he said.

In July last year, ADX and Bahrain Bourse launched the Tabadul Exchange Hub, the GCC's first digital exchange hub, aimed at boosting market and economic relations between the two countries.

A few months later, ADX signed agreements with Muscat bourse and the sultanate’s Clearing and Depository Company that allow dual listing of Muscat-traded companies in Abu Dhabi.

Currently, stocks traded on both Bahrain's and Oman's stock exchanges can directly be traded on the Tabadul exchange on ADX.

“Tabadul is a very efficient tool to penetrate more markets and enable investors to trade in stocks from different markets through a single stockbroker. I hope more markets from the region will join Tabadul network, which will enhance the market liquidity across the region,” said Mr Hamed.

In terms of sectors, he is bullish on energy and technology.

“Energy will continue to be the super star in addition to artificial intelligence companies. In addition, there are defensive sectors such as utilities, food and health care, which are good from a long-term dividend perspective,” he said.