The UAE IPO market is experiencing a significant boom, surpassing Europe. According to Ayman Hamed, the CEO of a securities broker in Abu Dhabi, the UAE’s ongoing surge in initial public offerings (IPOs) will be sustained for the next few years. This is due to the country’s efforts to attract foreign investment and enhance its competitiveness, driving economic development.
Hamed emphasized that the performance of equity markets has been largely propelled by the increasing number of IPOs, which have expanded the market’s breadth by including companies from various sectors such as utilities, logistics, and healthcare.
“If the spate of IPOs in the UAE iPO market 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.
In 2022, UAE IPO market experienced a significant increase, with 48 listings raising over $23B. This marked a substantial rise compared to the previous year, where 20 offerings generated $7.52B. This surge positioned the Gulf region as the highest contributor to IPO activity, following Saudi Aramco’s record-breaking $29B public offering in 2019.
According to EY’s Global IPO Trends report, Abu Dhabi showcased the strength of its capital markets by accounting for 14% of all global listings in the first quarter of 2023. Thie achievement is particularly noteworthy keeping in notice the challenging global IPO market environment.
During this period, the UAE capital attracted $3B in listing proceeds, securing the third spot worldwide. Notably, Adnoc Gas successfully raised approximately AED 9.1B ($2.5B) by selling a 5% stake, contributing to this impressive performance.
“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.
In recent years, the market turnover on the Abu Dhabi Securities Exchange (ADX) has witnessed a notable surge. In 2020, the average daily market turnover ranged between AED 200M and AED 300M. However, according to Mr. Hamed, the current turnover has significantly increased and now falls within the range of AED 1B to AED 1.5B.
International Securities, a subsidiary of Abu Dhabi-based International Holding Company since 2019, entered the IPO market in March 2020, coinciding with the beginning of the Covid-19 pandemic. Mr. Hamed reported that the broker’s involvement in IPO transactions yielded positive outcomes, with increased investor participation and turnover.
Previously known as Integrated Securities and a part of Shuaa Capital, International Securities underwent a rebranding after IHC acquired Shuaa Securities in November 2019.
“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 combined trading volumes of the company on the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) experienced a substantial increase, reaching AED 570B in 2022, compared to AED 15B in 2019.
Looking ahead, the ADX is expected to further expand its market depth and breadth by adding more markets to its Tabadul network. This expansion aims to facilitate seamless trading and enhance market connectivity.
In July of the previous year, ADX and Bahrain Bourse jointly launched the Tabadul Exchange Hub, becoming the first digital exchange hub in the GCC. The primary objective of this hub is to strengthen market and economic relations between the two countries.
Following this, ADX entered into agreements with the Muscat bourse and the sultanate’s Clearing and Depository Company, allowing for dual listing of Muscat-traded companies in Abu Dhabi. Presently, the Tabadul exchange on ADX facilitates direct trading of stocks from Bahrain’s and Oman’s stock exchanges, promoting increased cross-border trading opportunities.
“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.
