2018 set to be a landmark year for UAE financial markets
The initial public offering (IPO) market looks pretty strong as the UAE companies are projected to raise up to $9 billion (Dh33 billion) this year, which could see 2018 as a landmark year for the UAE financial markets, industry analysts have said.
Vijay Valecha, chief market analyst, Century Financial Brokers, said UAE companies are expected to raise $8-$9 billion (Dh29.36-Dh33 billion) from IPOs through listing in global as well as local equity markets, depending on their valuations.
As many as 9 companies from industrial, infrastructure, education and real estate sectors are likely to raise funds through IPOs this year.
“For local markets, Emirates Global Aluminium is likely to be the star with an expected IPO size of $3 billion (Dh11 billion) while infrastructure company Abu Dhabi Ports is targeting around $1 billion (Dh3.67 billion). Meanwhile, Gems Education is planning to raise $1.5 billion (Dh5.5 billion) through a London IPO. If all of these companies go through, 2018 could be a land mark year for UAE financial markets,” Valecha said.
Gregory Hughes, Mena IPO Leader at EY, also said that the UAE does look particularly strong in terms of announced and potential IPOs.
In UAE, 2017 was a marvellous year as firms raised somewhere around $2.1 billion (Dh7.7 billion).
There were two IPOs listed on the DFM in 2017. In Q2, Orient UNB Takaful Insurance was listed, raising $16.3 million. In Q4 2017, Emaar Development was listed for $1.3 billion (Dh4.77 billion). There was also one REIT listing on Nasdaq Dubai for Emirates NBD Asset Management at $105 million. Adnoc also raised $851 million (Dh3.12 billion) through listing on Abu Dhabi bourse.
Hughes said IPOs from larger, more established and profitable businesses with strong management track records might see more demand.
Mayur Pau, partner, EY Mena Growth Markets and Financial Services IPO Leader, said the listing of Adnoc Distribution on Abu Dhabi bourse may encourage more regional energy companies to go public in 2018 to raise capital driven by an improved oil price environment and favourable government initiatives.
Impact of MSCI on UAE markets
Hughes said the impact of the expected upgrade of KSA will likely bring more attention and interest to the region overall from global investors and funds. This could have a broader positive impact on equity markets, provided that other external and internal factors remain constant. The UAE already has emerging market status with MSCI.