A study revealed that 84 percent of UAE investors are prepared to invest in upcoming IPOs. Despite a slower global economic growth in 2023 due to high interest rates, inflation, and geopolitical tensions, the UAE demonstrated resilience, contributing to a robust IPO market where it accounted for 58 percent of GCC IPO proceeds in 2023.
The UAE Investor Pulse Survey 2024, conducted by Edelman Smithfield, a global financial communication advisor, highlights a strong investor interest in UAE IPOs for 2024. The survey shows a positive investor sentiment towards the valuation of companies that have gone public in the last three years, with 73 percent considering them fairly valued. Moreover, 71 percent of investors expressed confidence in the bookbuilding process, a key component of IPOs, reflecting high satisfaction and trust in its transparency and effectiveness.
Approximately 67 percent of respondents believe that having two separate exchanges enhances the UAE capital markets and provides more investment opportunities. Simon Hailes, Managing Director and Head of Middle East at Edelman Smithfield, commented on the survey results, emphasizing the importance of transparent and consistent communication to sustain the IPO momentum. He noted that two-thirds of investors expect transparency and effective IPO communication from issuers to make informed decisions.
Additional findings from the survey include: 65 percent of investors prioritize transparent IPO communications; 63 percent see the positive impact of well-produced roadshow videos on IPO investment willingness; and 7 percent consider the use of proceeds when evaluating potential IPO investments. Investors also focus on quality earnings (82 percent), profitability (41 percent), strong balance sheets (31 percent), and brand awareness (27 percent) when evaluating companies going public. They prefer new issuers with organic growth plans (71 percent) and seek increased clarity and availability of medium-term guidance on a quarterly basis. Investors also favor boards with diverse experience in overseeing publicly listed entities, cybersecurity, and ESG, with interest in real estate, tech, and healthcare sectors for IPOs.
