Dubai: The Initial Public Offering of the Emaar Properties’ unit could be a precursor for more primary offerings in the UAE equity markets, analysts said.
The primary issue will be the first in a gap of three years on the Dubai Financial Market or Abu Dhabi Securities Exchange, after the DXB Entertainments or the formerly Dubai Parks and Resorts was listed in November 2014. Earlier in the month, the Emirates Securities and Commodities authority told Gulf News that the regulator was working on 5 different IPOs that will hit the market in 3-6 months.
“Emaar Development coming to the market will encourage more issuers. There are a few IPOs in the pipeline. We have not seen a flurry of IPOs as equity markets have not performed according to the expectations,” said Vrajesh Bhandari, portfolio manager at Al Mal Capital.
The Dubai Financial Market General Index has returned 3.19 per cent so far in the year due to lower oil prices, compared to a 15 per cent gains in Dow Jones Industrial Average.
The UAE market has not witnessed an IPO since 2015, but regionally the amount raised through primary offerings reached $788 million in the first half, down 21 per cent compared to the same period last year. Most of the value came in from Saudi Arabia’s secondary or Nomu market, which had about nine listings in the first six months to June.
“Increasing stability in oil prices and confidence in the global economy and markets are likely to drive an increased IPO activity in 2017 and 2018 across Mena, with a strong backlog of companies potentially preparing to come to market. The key driver for the MENA IPO market will likely be the privatisation of leading government-owned assets across a number of sectors,” Gregory Hughes, EY Mena IPO Leader, said.
State-owned Adnoc, which is among the largest energy producers in the world, plans to IPO its retail and shipping business in early 2018.
“We have a number of companies, which have submitted applications for IPOs. We will get two of them on the platform by this year,” Obaid Al Za’abi, chief executive officer at Securities and Commodities Authority. The companies are into petroleum distribution, chemicals, aluminium, banking, insurance and retail, Al Za’abi said without mentioning names.
Ernst and Young has a positive outlook for IPOs in the region.
“Global IPO activity should continue to strengthen in the second half of 2017, underpinned by capital markets reaching all-time highs. Investor sentiment has improved and the global outlook is more positive, which should reflect on the IPO market in the MENA region,” Mayur Pau, Mena Financial Services IPO Leader, EY, said.