With renewed deal flow and fund-raising activity, the UAE’s private equity market is poised to make a strong comeback.
The Abu Dhabi Securities Exchange (ADX) index has increased by over 60% year on year, while the Dubai Financial Market (DFM) has risen by over 30%. The MSCI Emerging Markets index has lost more than 20% of its value.
DEWA raised $6.1 billion from a group of blue-chip international and local investors in its recent IPO.
Furthermore, rising daily volumes on the ADX and DFM, as well as a strong investor appetite for new issues, are expected to encourage private equity firms to consider local IPOs in the UAE as a future exit strategy. “Regional investors are hungry for new issues, especially in sectors that aren’t represented on the ADX or DFM,” said Gulf Capital CEO Dr. Karim El Solh.
PE exits have been difficult in recent years, with most exits being completed as trade sales.
The UAE’s private market has been in decline for the past four years, owing to the global economic slowdown and regional geopolitical issues. The collapse of Abraaj Capital was a blow to overall investor confidence, even though the UAE remains the epicenter of PE deals in the region.
While the Covid crisis slowed economic activity, PE fundraising and deals remained slow, as most regional players focused on growing their existing portfolio companies rather than new acquisitions.
The industry had significant dry powder as deal flows shrank (uninvested funds). Because overall risk appetite has remained low in recent years, local and international players have emphasized deal-based fundraising rather than blind pools.
