The head of a UAE-based asset manager has described the growing trend for UAE companies to launch their initial public offerings (IPOs) abroad rather than within the UAE as “a troubling sign”.
Shehab Gargash, chairman of Daman Investments, made his comments to reporters, stating that the lack of local IPOs suggests the UAE capital market lacks credibility.
The last significant IPO in the country was the listing of property firm, Emaar Development, in late 2017, which raised $1.3 billion.
However, few IPOs have taken place in the UAE since with local firms preferring to list abroad. In April, Mena-based payments processor Network International had its $1.4 billion IPO in London.
Gargash described this trend as “a troubling phenomenon” that “does not speak well of the market”. He also argued that the liquidity generated by companies listing locally “is far superior” to those companies listing abroad.
“They have decided the credibility of the market is not to the point where they are comfortable listing on it, and that is a major commentary on the state [of the market],” said Gargash.
He added that there is no shortage of UAE firms looking to list, however they do not feel confident enough in the local market to do so. “We need to raise the bar on the credibility of the local market and that will solve the issue,” said Gargash.
Ironically, Daman Investments was set to launch its own IPO in 2015 but abandoned the move, in part due to falling oil prices, and has no current plan to resurrect the listing in the near term.
©2019 funds global mena