The Dubai Financial Market, the only publicly listed stock exchange in the Arabian Gulf with a market capitalisation of Dh127 billion, expects two initial public offerings to take place between now and the end of next year as confidence begins to pick up, a bourse official said on Sunday.
"Between now and next year, I expect two companies to list because some of the others are hesitant," said Hassan Al Serkal, executive vice-president of DFM.
“The companies we have met with [to discuss potential IPOs] are more than six or seven companies. The momentum is there but they are waiting for stability and the right time to come to the market.”
Emaar Properties, Dubai’s biggest listed developer, last month announced plans to float up to 30 per cent of its real estate business on the DFM. The listing, which would be the third for the developer, is expected to take place this year, said Mr Al Serkal.
Theme park operator DXB Entertainments, formerly Dubai Parks and Resorts, was the last major listing on the DFM in 2014, when it raised Dh2.5 billion.
Regional political instability, poor investor appetite and the economic slowdown from lower oil prices have hit investor confidence in Arabian Gulf equity markets.
The DFM is down by about 4 per cent year-to-date, the third worst performing market in the Gulf region behind Qatar and Oman
Mr Al Serkal said some private and family owned companies have been prepped up to enter corporate life, but are waiting for investor confidence to return to the market.
“The sectors represented in the market do not reflect the real economy, such as the tourism, medical and aviation sectors,” said Mr Al Serkal, adding the market would like to encourage companies from these sectors to list.
Nasdaq Dubai, the DFM’s sister market, had its first IPO since March 2015 when Emirates NBD’s real estate investment trust, ENBD Reit, raised US$105 million in March. The Sharia-compliant real estate trust invests in a diversified portfolio of assets and is the second listed Reit in the UAE after Emirates Reit, which is also on Nasdaq Dubai.
The DFM, which currently has 12 dual listings, is talking to two Kuwaiti companies to list their shares on the Dubai bourse.
“We still are attracting companies because we a a very well regulated market and have more liquidity than other markets in the region,” said Mr Al Serkal
According to advisory PwC, there was a five-year record number of IPOs in the first quarter of this year, thanks to the launch of Nomu, a parallel market in Saudi Arabia.
The new market, which targets smaller cap companies, currently has eight listed securities.
The IPO of state-owned energy company Saudi Aramco, which is slated for next year, is expected to revive interest in regional IPOs.
Already news about Saudi Arabia’s inclusion on watch list of index provider MSCI to be included in its widely-tracked Emerging Markets Index is creating a buzz among foreign investors.
Mr Al Serkal said an upgrade of Saudi Arabia emerging markets status would be a positive for the whole region and would help to attract cash from foreign investors, who currently make up about 22 per cent of DFM's market capitalisation.