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Rise in IPOs Could Drive Growth for Capital Markets Across MENA Region, Says DIFC

Increased initial public offering (IPO) activity is supporting banks, brokerage firms and law firms within the Dubai International Financial Centre’s (DIFC) ecosystem, with fees for MENA deals alone exceeding $1.2billion.

In a new report, ‘Regional Outlook for Banking and Capital Markets‘, produced by DIFC in partnership with LSEG Data & Analytics, the entities discuss how they expect regional IPO growth to come in three phases:

  1. The continued privatisation of state-related entities
  2. Listings by family-owned companies
  3. Fintech and tech-enabled start-ups

DIFC explained that 2024 shows signs of a rebound supported by the postponement of several 2023 deals in anticipation of more favourable market conditions. In 2022, 51 IPOs took place, raising $22billion, according to EY.

Privatising state-related entities could lead to greater economic diversification, private sector development and sovereign liquidity creation. By March 2024, Dubai had followed through on six of the 10 government entities it plans to take public, including Parkin, which attracted $71billion in orders.

Arif Amiri, DIFC LSEG
Arif Amiri, CEO of the DIFC

Arif Amiri, CEO of the DIFC Authority, said: “Driven by the surge in IPOs, 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.

“With its strategic initiatives and robust regulatory framework, DIFC plays a pivotal role in driving innovation and stimulating growth within the financial sector. 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.”

IPOs driving business growth

From the private sector, listing family-owned companies is helping to drive business growth, succession planning and enhanced governance and transparency. Al Ansari Financial Services, one of the UAE’s largest remittance and foreign currency exchange companies, owned by a local family group raised $210million from its 2023 IPO.

DIFC and LSEG believe now is an enticing time for other family businesses to do the same. A third wave of IPOs is expected through fintech and tech-enabled start-up exits, helping to stimulate new industries with high-growth potential, while creating strong demand from investors and viable exit options for VC investors.

Proceeds from MENA equity and equity-related deals exceeded £13billion in 2023. The report also highlights how the region’s capital markets are becoming more mature, driven in Dubai by DIFC’s robust regulatory framework and commitment to innovation. DIFC is also home to more than 230 investment banks, all of which are stimulating capital markets.

According to recent data, the UAE attracted a record-breaking number of High-Net-Worth Individuals (HNWIs) in 2022, which continued into 2023 and beyond. It also boasts around 109,900 resident HNWIs, including 298 centi-millionaires and 20 billionaires, prompting DIFC’s estimated 370 asset managers to strengthen their regional presence.

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