Alef Education, which raised USD 515 million on the Abu Dhabi Securities Exchange (ADX), and Spinneys, which raised USD 375 million on the Dubai Financial Market (DFM), were two of the biggest initial public offerings (IPOs) in the United Arab Emirates during the second quarter, according to PwC Middle East’s most recent IPO+ Watch.

Saudi Arabia was the leader in the Gulf region in terms of IPO activity reaching USD 1.6 billion, or 61% of all IPO activity in the region in Q2 2024. This quarter also saw the first initial public offering (IPO) on the Boursa Kuwait in two years, with USD 147 million raised by Beyout Investment Group Holding Company.

Notable IPOs on the Saudi Arabia stock market during the quarter included the IPO of Dr. Soliman Abdel Kader Fakeeh Hospital Company, which raised USD 763 million on the Tadawul stock exchange.

According to the report, this quarter’s IPO activity was observed in a number of different sectors, including technology, media, and telecommunication (USD 515 million), consumer markets (USD 530 million), financial services (USD 256 million), energy, utilities, and resources (USD 148 million), industrials, manufacturing, and automobile (USD 407 million), and health industries (USD 774 million).

A strong demand for financial products that comply with Sharia law was evident from the report, which highlighted the significant number of Sukuk issuances that occurred during the quarter, raising over USD 10 billion as opposed to USD 2.6 billion in the same period last year.

Companies in the fields like technology, healthcare, and real estate sectors are especially showing interest in exploring IPO opportunities, as the Gulf nation’s regulatory framework has also evolved to support this trend, providing a supportive environment for companies to enter into an IPO and list their shares.

“The technology sector has seen a surge in IPO activity, driven by the increasing demand for digital solutions and the UAE’s ambition to become a global tech hub. Healthcare companies are also looking to go public to raise funds for expanding their services and investing in advanced medical technologies. Meanwhile, the real estate sector continues to attract investors due to the UAE’s growing population and the demand for residential and commercial properties,” stated Simon Gordon, the managing director of Sovereign PPG Corporate Services, while interacting with the Middle East Economy.

“In the past decade, the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) have witnessed significant milestones, with an increasing number of listings and higher trading volumes. Thanks to regulatory changes that allow greater foreign ownership and participation, the markets have also become more accessible to international investors,” he stated further.

“Currently, the UAE stock markets are experiencing a bullish phase, driven by strong corporate earnings, high oil prices, and increased government spending on infrastructure projects. IPO interest and growth have further fuelled this upward trend, with new listings attracting substantial investor demand and driving up trading activity,” Gordon noted, while stating that by going public, companies are enjoying advantages like having access to a new revenue stream and an influx of capital, which can be used for expansion, debt reduction, or investing in new projects. The IPO route is also enhancing the company’s visibility and credibility, which can attract more customers and business opportunities.

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Foreign investors executed capital market trades worth Dh218 billion in 2019 in the UAE markets, a rise of 20.4 percent as compared to 2018. The overall volume of trades executed by foreign investors in the Abu Dhabi Securities Exchange amounted to Dh112.75 billion last year, with a net investment of Dh9.54 billion from foreign investors.

The Dubai Exchange too witnessed Dh105.4 billion worth trades executed by foreigners transacted, with a net investment of Dh2.98 billion. While the Abu Dhabi exchange rose to 3.27 during the year and closed at 5,075.77 on Dec 31, the Dubai market fared much better by closing at 2,764.86, 9.3 percent higher during 2019.

In 2013, the UAE markets were elevated to the emerging markets league by index compiler MSCI. This has attracted both active and passive overseas investors, thus resulting in a higher long-term capital growth.

The Securities and Commodities Authority (SCA) has also drafted new policies to entice foreign investors. The SCA, in early 2019, elicited opinions on regulating cryptocurrencies in the nation.

This decision is likely to enhance the digital currency transactions in the second-largest economy in the Gulf region. The new policies will cover all facets of the cryptocurrency industry in the Emirates, starting from token issuance requirements to trading and safeguarding principles, without compromising on investor interests.

It also comprises measures to check money laundering, data security controls and rules on technology governance. The Abu Dhabi Global Market’s Financial Services Regulatory Authority provided a theoretical consent for the launch of three cryptocurrency exchanges to operate in the country.

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It also reported a net revenue of Dh163.5 million in the first six months to June compared to Dh182.4 million during the same period last year. Its expenses stood at Dh98.4 million during the first half of the year compared to Dh99.6 million last year.

For the second quarter, the Dubai Financial Market’s net profit reached Dh37 million from Dh33.9 million in the previous year, showing a 9 percent increase. Its trading value during the first six months dropped to Dh25 billion, with a 31.5 percent decrease from last year. 

Essa Kazim, Chairman of the Dubai Financial Market Company said in a statement, “The decline in DFM’s trading value echoes the prevailing trend of international exchanges during the first half of the year, as 74 per cent of the global exchanges registered a decline in their traded value during the first five months of this year compared to the same period of 2018.”

The Dubai Financial Market General Index increased 5 percent in the first half of the year. “We believe that this reasonable growth is a good indication considering the downward trend that prevailed in most of exchanges globally, as 47 exchanges, representing two thirds of the members of the World Federation of Exchanges (WFE) have witnessed a decline in their indices,” Kazim said. 

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