A trend of UAE companies conducting their initial public offerings (IPOs) abroad is a “troubling” sign of a lack of credibility in the local market, according to Daman Investments chairman Shehab Gargash.
Relatively little IPO activity has taken place locally since late 2017, when Emaar Development sold $1.3 billion in new shares.
A number of companies, however, such as Dubai-based payments provider Network International, have been listed overseas.
“One troubling phenomenon we’ve seen in the IPO market is companies choosing to go abroad,” Gargash said this week. “This does not speak well of the market. It has nothing to do with the company itself. Companies make their own decisions.”
Recent IPOs in London, Gargash said, are a “troubling sign about our current market”.
“If you ask me, the liquidity generated by these companies listing locally is far superior than the liquidity they can generate by listing [outside the UAE],” he said.
“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].”
IPOs to return
However, Gargash said he is confident that the future would see more local companies list their IPOs locally.
“The IPO channel is always there and full of people waiting, even in the darkest hours,” he said. “I’m not so bothered that there are not enough new listing, because the new listings are actually there waiting. It’s not for a lack of people wanting to list. It’s for the quality of the market in which they are listing. We need to raise the bar on the credibility of the local market, and that will solve the issue.”
Daman Investments had its own plans to launch an IPO in 2015, although the listing never materialised due to falling oil prices.
Gargash told reporters that the company currently has no plans to list, although that the firm does not rule out a listing in the future.
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