Dubai International Financial Centre (DIFC), the leading global financial centre in the Middle East, Africa, and Southern Asia (Measa) region, has published a report that focuses on how regional IPO growth is expected to play out in three phases.

The three phases are: continued privatisation of state-related entities, listings by family-owned companies; and FinTech and tech-enabled start-ups, said the report titled, ‘Regional Outlook for Banking and Capital Markets’, and published in partnership with LSEG Data & Analytics.

Additionally, it has taken into account the profile of investors based in the region, especially Dubai, which has attracted a rising number of wealthy individuals and families who are seeking to capitalise on investment opportunities.

Arif Amiri, Chief Executive Officer, DIFC Authority, said: “Driven by the surge in IPOs, capital markets across the MENA region have experienced remarkable expansion, driven by reforms aimed at enhancing market infrastructure and fostering greater foreign and regional investment inflows.

“With its strategic initiatives and robust regulatory framework, DIFC plays a pivotal role in driving innovation and stimulating growth within the financial sector.

“Dubai’s IPO boom underscores the city’s status as a thriving hub for capital markets, and DIFC’s role in enabling this acceleration through the firms that drive capital markets and provide advisory services for IPOs will continue to contribute to the dynamic evolution of global finance.”

Multifactor IPO Growth

Following two years of moderate IPO activity, 2024 shows signs of a rebound supported by the postponement of several 2023 deals in anticipation of more favourable market conditions. Based on data published by EY, 51 IPOs took place in 2022, raising $22 billion, including a mix of both family businesses and the public sector.

The privatisation of state-related entities is leading to greater economic diversification, private sector development and sovereign liquidity creation. As of March 2024, Dubai had followed through on six out of the ten government entities it plans to take public, including Parkin, which was 165 times covered and attracted$71 billion in orders – a new record for the emirate.

Another recent example includes the November 2023 listing of Dubai Taxi Co, a unit of Dubai’s Roads and Transport Authority (RTA), which raised $315 million and was 130 times oversubscribed, while Saudi Arabia’s wider plans to privatise $55 billion in assets by 2025 reinforce the increasing regional trend towards privatisation.

From the private sector, the listing of family-owned companies is helping to drive business growth, succession planning and enhanced governance and transparency.

For example, Al Ansari Financial Services, one of the UAE’s largest remittance and foreign currency exchange companies, owned by a local family group raised $210mn from its 2023 IPO, while Spinney’s (Spinneys 1961 Holding PLC), which was incorporated in DIFC to list its shares on DFM, thereby benefiting from its extensive laws, regulations, and stability, listed in April 2024.

Spurred on by the momentum of other, highly anticipated listings, such as Lulu’s forthcoming IPO, there is now an ever-growing list of demonstrable incentives for other family businesses to follow suit. A third wave of IPOs is expected through FinTech and tech-enabled start-up exits, helping to stimulate new industries with high-growth potential, while creating strong demand from investors and viable exit options for VC investors.

Dubai as a Capital Markets Hub

Through increased IPO activity, banks, investment banks, brokerage firms and law firms within DIFC’s ecosystem also benefitted significantly from the privatisation of state enterprises, with fees for MENA deals alone exceeding $1.2 billion and proceeds from MENA equity and equity-related deals exceeding $13 billion in 2023.

The report also highlights how the region’s capital markets are becoming more mature, driven in Dubai by DIFC’s robust regulatory framework and commitment to innovation. DIFC is also home to more than 230 investment banks, all of which are stimulating capital markets.

A Magnet for Investors

The region is home to a vast range of potential investors. Notably, these include family businesses, and wealthy individuals who are represented by the influx of wealth of asset management firms.

According to recent data, the UAE attracted a record-breaking number of high-net-worth Individuals (HNWIs) in 2022, which continued into 2023 and beyond. Currently, there are an estimated 109,900 resident HNWIs, including 298 centi-millionaires and 20 billionaires, prompting DIFC’s estimated 370 asset managers to strengthen their presence in the emirate. – TradeArabia News Service