‘There is appetite out there for UAE, regional stocks’, says Hitesh Asarpota
Dubai: The UAE’s first stock market listing of 2025 – that of Alpha Data, the tech firm – is done against the constant backdrop buzz of which could be the next IPO. The name of Etihad Airways is constantly on the chatter board of market analysts and investors.
But the bigger noise is what’s coming from outside of the UAE markets, with global having definite mixed feelings about what the US President Trump might be planning next with tariffs. They all share the same thread: Will he? Won’t he? If he does, will the tariffs be on for long?
The concern then turns to what global funds and UAE/GCC based investors would – or need to - do under such circumstances. In an interview to ‘Gulf News’, Hitesh Asarpota, CEO of Emirates NBD Capital, says the best option would be to keep investing.
So, are global institutional funds taking a lite-touch approach to UAE stocks?
With all the volatility we are seeing globally, there has been an outflow of funds from emerging markets worldwide. But I think the UAE still plays differently.
In December, for the (online delivery aggregator) Talabat IPO, we saw exceptionally strong demand from non-GCC investors.
Even on a smaller IPO like Alpha Data, we saw 60% of the placements from outside the UAE, of which about 25% originated from outside the GCC. What this tells you is there is appetite out there for UAE and regional equities.
What you are saying is that global investors will stay vested in UAE, GCC stock floats?
What I can tell you is that on most UAE IPOs, we've seen a split of about 70%-75% GCC and about 25% non GCC.
I think the key theme investors from outside are saying is they want to see larger IPOs in the UAE. These funds are really large and even allocating a small percentage of that is something around $50 million. Only if someone is doing a $1 billion IPO, that comes to a 5% allocation. These global funds need to see bigger IPO sizes.
That makes most of the recent GCC IPOs quite small in comparison. Did it see limited tale up from global funds?
We had a $2 billion transaction on Talabat, $1.7 billion on Lulu. So, it’s been a bit of a mix, because you had the family-owned businesses to list. Very few of them are mega- or large-cap.
At the same time, we have also see the likes of DEWA (which was $6 billion), and the Talabat and Lulu of more recent times.
You talk about bigger IPOs drawing more global funds. Will UAE IPO promoters consider raising the allocation for retail investors? Or is that stuck to certain limits?
In some jurisdictions, they don’t even have a retail tranche.
What happens in UAE IPO retail offerings is that most of the appetite effectively comes on the last date. This is because banks give leverage to these retail investors, and for them to avoid the leverage costs, the funds typically come in on the final day (of the subscription).
From the issuer’s perspective, this doesn’t give the visibility how much the demand is or whether it would come in or not.
It would be very difficult to go to SCA (the UAE regulator) and change the allocations between retail and institutional.
That’s why retail tranches are generally kept at 5%. It’s just not a dynamic process like the one for qualified investors or for institutional ones.
Alpha Data was the first UAE IPO of 2025 – you see more tech companies taking the same direction?
If you look at all the changes happening in the UAE on the digital economy, the AI strategy, etc., tech enablers like Alpha Data will play a key role. The UAE’s AI contribution from the GDP is expected to be roughly $100 billion by 2031.
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