Successful Turnaround in Dubai Tech Industry Evidenced by Major IPO in 2021
The Middle Eastern branch of German food delivery leader Delivery Hero SE is gearing up to commence trading in Dubai next week, marking a significant turnaround for the city’s stock market over the past few years.
Talabat’s initial public offering, valued at $2 billion, stands as the largest IPO in the Middle East this year and the biggest technology listing worldwide. This development could pave the way for a renewed focus on private listings in the emirate.
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“Talabat is certainly not going to be an isolated event,” stated Prasad Chari, group head of equity capital markets at Emirates NBD, the bank instrumental in the IPO. He mentioned that they are in “active discussions” with multiple issuers and sponsors worldwide exploring the potential for listings on Dubai’s stock exchange.
Since the city kicked off its IPO campaign in late 2021, Emirates NBD has ranked among the top advisers for new share offerings in Dubai. The government’s privatization initiatives have generated over $8 billion, significantly boosting the total market capitalization of publicly traded stocks.
In conjunction with a similar surge of activities in nearby Abu Dhabi, the United Arab Emirates is poised to be the most active venue for listings across the Europe, Middle East, and Africa region for the third consecutive year, according to Bloomberg’s compiled data.
This represents a striking turnaround for Dubai compared to just a couple of years ago.
In 2021, the market saw a significant decrease in new share offerings, and a series of delistings further weakened investor confidence. During this time, Abu Dhabi and Riyadh were already capitalizing on their privatization efforts that attracted billions and transformed the region into a prime destination for IPOs.
Dubai’s fortunes began to shift in November of that same year when the deputy ruler announced plans to float 10 state-owned enterprises. Concurrently, the stock exchange underwent a major overhaul, accompanied by a slew of initiatives to incentivize private companies to go public.
These actions coincided with a post-pandemic recovery in Dubai’s economy, fueled by the World Expo and relaxed travel restrictions that revitalized the tourism sector. An influx of expatriates from around the globe has further contributed to this recovery.
Talabat’s market debut will be observed closely by various other companies, including the operator of the classifieds platform Dubizzle, the owner of the shisha brand Al Fakher, and hotel operator FIVE Holdings, all of which are contemplating share offerings.
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This debut may serve as an indicator for government-owned entities preparing for their own listings.
A few years after witnessing a spate of real estate delistings amid a declining property market, the government aims to leverage the current rebound — with Dubai Holding looking into consolidating two property portfolios into real estate investment trusts for listing, according to Bloomberg News.
Subsequent sell-offs are also anticipated to follow the IPO trend, as per Chari’s remarks, further enhancing liquidity in the market.
Meanwhile, the benchmark Dubai Financial Market General Index has surged nearly 20% this year, significantly outperforming its counterparts in Abu Dhabi and Saudi Arabia.
However, as Dubai stocks hover near their highest levels since 2014, this also translates to higher price valuations. Analysts have warned that the index could be “more susceptible to negative developments than to further positive news.”
“A major risk for Dubai’s economy is a slowdown in global growth, which would dampen demand for key sectors reliant on external markets,” noted Monica Malik, chief economist at Abu Dhabi Commercial Bank. “Nevertheless, ongoing investment plans should help bolster the economy, and Dubai’s fiscal situation has markedly improved.”
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