When Dubai last month hosted the Bloomberg Capital Markets 2022 Forum, the main talk was about the expected “boom” of IPO activity in the UAE.
The participants in this forum talked about a boom that will be recorded this year in the activity of public offerings, just six months after a report by Bloomberg that said “Dubai is missing the opportunity for the initial public offering that is sweeping Abu Dhabi and Riyadh.”
The massive IPO initial public offering of the DEWA, worth $6.1 billion and attracting $86 billion in applications, was a watershed moment for Dubai, which has become very IPO active.
9 billion shares were sold in the company, representing 18% of the submitted capital, while 82% of the capital issued by the Dubai government was retained.
Why is DEWA important?
DEWA is the second largest public offering in Europe, the Middle East, and Africa since the beginning of 2022 and the largest in the history of capital markets in the UAE.
It placed the Dubai Financial Market in fifth place worldwide in terms of IPO returns, after Shanghai ($20.3 billion), South Korea ($11.4 billion), Nasdaq ($10.4 billion), Shenzhen ($10 billion), and Dubai ($6.1 billion), according to Bloomberg.
“DEWA” has also become the largest company listed on the DFM in terms of market value, at about 124 billion dirhams (33.8 billion dollars), based on its final offer price of 2.48 dirhams last week.
The other reason why it’s important is also that the start of trading on “DEWA” raised the capitalization of the Dubai market to about 600 billion dirhams.
Strong investor appetite
Qualified investors, individual and institutional subscribers, exceeded all expectations, receiving 37 times more subscriptions than allotted shares.
This turnout reflects the confidence that investors place in Dubai’s capital markets, whether they are local or international.
One of the main reasons for the rising investor appetite may be the company’s healthy balance sheet. It generated nearly $3.5 billion in profits for the past fiscal year, and pledged to pay about $1.6 billion in profits over the next five years to its new investors.
Another reason is the growing momentum among governments in the region to list their state institutions, as the Gulf states and the UAE in particular seek to diversify their economies away from oil.
Among the 10 expected IPOs
DEWA’s IPO is the first for a government company among the expected ten government and semi-government listings, as part of Dubai’s strategy to take a set of measures and policies to support the financial sector in the emirate and stimulate growth in it.
It is expected that the inclusion of DEWA will be followed by the bridge toll company “SALIK”, the “TECOM” group, and the Emirates Corporation for Central Cooling Systems “Empower”.
“DEWA” is a success story, its green pointing stock in the DFM changed the rules of the game in UAE’s capital markets and broke open the doors to a large wave of IPOs. It is a step that will contribute to increasing the depth of the markets and their market value and enhancing their investment attractiveness, thus consolidating the position of the financial markets in the UAE as one of the most important financial and business markets in the world.
