UAE likely to see one IPO this year as markets performance improves

Economic indicators are also better than last year, which is encouraging for new listings, SCA chief executive says

Obaid Al Zaabi, the chief executive at Securities and Commodities Authority, says markets are performing better than the last year. Sarah Dea / The National

The UAE will see at least one initial public offering before the end of this year as macro and micro-economic indicators improve and capital markets perform better than the last year, the chief executive of UAE markets regulator, Securities and Commodities Authority, said.

“Financial markets are in a good situation compared to the last year,” Obaid Al Zaabi, told reporters on the sidelines of the annual Corporate Restructuring Summit in Dubai on Wednesday. “This year …. one [IPO] in December,” he said without naming the exchange or the company seeking the listing.

Abu Dhabi-headquartered SCA has a strong line-up of firms that are ready to go public, Mr Al Zaabi said. Most of the interest SCA has received has come from real estate and financial sector firms. The potential issuers are “mostly from private sector”, although SCA would like to see more government-related entities come to the market in the future, he said.

“We are receiving a lot of application for IPOs. [However] at the end of the day, the final decision for IPO depends on the company to decide when,” Mr Al Zaabi said. “There are a number of applications we are overseeing [that are] completed already.”

Some of these companies, he said, are looking for “exemptions” and the regulator is working with them, he said, declining to specify how many applications SCA has already received.

“Some of them [IPO applications] are from last year and few of them [we have] just received,” he noted.

The Dubai Financial Market and the Abu Dhabi Securities Exchange, the two main bourse in the UAE, last saw new listings in 2017 when Emaar Development, the real estate arm of Emaar Properties, sold $1.3 billion (Dh4.77bn) in new shares on DFM and Adnoc Distribution, UAE’s biggest fuel retailer, listed 10 per cent of its shares on the ADX.

In April the DFM said it was at different stages of discussions with potential issuers including three companies from the industry, oil and gas services as well as healthcare sectors, according to Bloomberg. Timing of the potential listings, however, was dependent on the companies, the exchange said at the time.

Dubai's bourse has risen more than 14 per cent since the beginning of this year, while the main measure in Abu Dhabi is up 3.7 per cent.

Capital markets, according to Mr Al Zaabi, will be in in a “very good situation” at the end of the year, helped by strong performance from financials sector companies and banks.

Though listings have slowed in the GCC the value of capital raised on equity markets rose 87 per cent year-on-year in the second quarter of this year, according to a PwC report released last month.

Saudi Arabia had two listings - Arabian Centres Company and Maharan Human Resources Company, raising $866m but the number of deals declined from five in the same period last year.

Saudi Arabia will continue to lead the IPO activity in the region, however, the UAE Cabinet’s recent announcement of sectors and economic activities eligible for 100 per cent foreign ownership is expected to revitalise market activity in the UAE in the near future, Steve Drake, capital markets partner at PwC Middle East, said in the report.