Dubai has witnessed a surge in initial public offerings (IPOs) in recent years, solidifying the city’s status as a thriving hub for capital markets. In its latest report ‘Regional Outlook for Banking and Capital Markets’, the Dubai International Financial Center (DIFC) in collaboration with LSEG Data & Analytics highlights how regional IPO growth will come in three phases. In addition, the report highlights the profile of investors in the region, particularly in Dubai, which has attracted a rising number of wealthy individuals and families who are seeking to capitalize on investment opportunities.
Three phases of IPO growth
DIFC’s report focuses on how regional IPO growth will come in three phases: The continued privatization of state-related entities, listings by family-owned companies, and fintech and tech-enabled start-ups.
Phase 1: Privatization of state-related entities
The report predicts that the privatization of state-related entities will support the initial phase of regional IPO growth. This phase has already seen substantial activity, contributing to economic diversification, private sector development, and enhanced sovereign liquidity. Notably, Dubai has successfully taken six out of the 10 government entities public, including the record-setting Parkin IPO, which saw an oversubscription of 165 times with $71 billion in orders. In November 2023, Dubai’s Roads and Transport Authority (RTA) also listed its Dubai Taxi Co. IPO, which raised $315 million and saw an oversubscription of 130 times.
Meanwhile, Saudi Arabia aims to privatize $55 billion in assets by 2025. This reinforces the increasing regional trend towards privatization.
Phase 2: Listings by family-owned companies
The second phase of regional IPO growth focuses on family-owned companies going public. This trend is evident with successful IPOs such as:
- Al Ansari Financial Services IPO, which raised $210 million in 2023.
- Spinney’s 1961 Holding PLC IPO, which was listed on the Dubai Financial Market (DFM) in April 2024.
Due to the momentum these listings saw, other family businesses are following suit, like Lulu’s forthcoming IPO.
“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,” stated Arif Amiri, CEO of DIFC Authority.
Phase 3: Fintech and tech-enabled start-ups
The final phase of regional IPO growth anticipates a surge in IPOs from fintech and tech-enabled start-ups. Markets expect this wave to stimulate high-growth industries, create strong investor demand, and provide viable exit options for venture capital investors.
DIFC’s ecosystem grows
The increase in IPO activity and privatization efforts in Dubai and the region has benefitted banks, investment banks, brokerage firms, and law firms in DIFC’s ecosystem. Hence, fees for MENA deals alone exceeded $1.2 billion. Meanwhile, proceeds from MENA equity and equity-related deals exceeded $13 billion in 2023.
The report also highlights how the MENA region’s capital markets are becoming more mature due to DIFC’s robust regulatory framework and commitment to innovation in Dubai. DIFC is also home to more than 230 investment banks, all of which are stimulating capital markets.
“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,” added Amiri.
Read: Alef Education to list 20 percent shares on Abu Dhabi stock market
UAE attracts high-net-worth individuals
Dubai’s allure as a financial hub is evident in the record-breaking influx of high-net-worth Individuals (HNWIs). In 2022 and 2023, the UAE saw a significant increase in resident HNWIs. Current estimates indicate 109,900 HNWIs, including 298 centi-millionaires and 20 billionaires. This influx has strengthened the presence of asset management firms, with DIFC now hosting approximately 370 asset managers.
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