Bloomberg - Dubai Misses Out on the IPO Boom Sweeping Abu Dhabi and Riyadh

Vijay Valecha, Special to Bloomberg September 30, 2021

Dubai may be the tourist gateway into the Middle East, but equity investors are flocking to its neighbors Abu Dhabi and Riyadh instead, as share sales worth billions of dollars heat up local markets.

Initial public offerings from Saudi Arabia’s ACWA Power International and Saudi Telecom Co.’s internet-services unit, as well as Abu Dhabi Ports and Adnoc Drilling Company PJSC are livening up their home exchanges. Yet, the United Arab Emirates’ other bourse, Dubai, only has delistings like that of Emaar Malls PJSC on the horizon.

Rebounding crude prices in 2021, further boosted by a global energy crunch, are buoying oil-rich Saudi Arabia and Abu Dhabi, which has also worked hard to revive its local bourse. Meanwhile, Dubai’s economy, heavily reliant on hospitality, real estate and tourism, has been ravaged by the pandemic.

“Dubai has a lot of catching up to do: Its liquidity profile is weak in comparison to Abu Dhabi and Riyadh, which are also some of the best-performing emerging markets this year,” said Salah Shamma, Franklin Templeton’s Dubai-based head of equity investment for the Middle East and North Africa.

Before the recent surge in offerings, Abu Dhabi’s stock exchange had gone three-and-a-half years without any IPOs, data compiled by Bloomberg show. Dubai has only seen one small company go public since 2017, while its only prospect of a listing this year went up in smoke when logistics firm Tristar Transport pulled its deal in April.

In other gulf markets, demand for new stocks has been through the roof. Investors placed more than $34 billion of orders for Adnoc Drilling’s $1.1 billion IPO, while Arabian Internet and Communications Services Co., also known as solutions by stc, attracted a whopping 471 billion riyals ($126 billion) in bids for its $966 million offering this month.

A tie-up with Abu Dhabi’s bourse would be one way to bolster Dubai’s market, according to Vijay Valecha, chief investment officer at Dubai-based consultancy Century Financial. “Worldwide, stock exchanges are merging to increase their investor base and improve their daily trading volumes.”

In the meantime, the deals deluge will likely carry on for Abu Dhabi and Riyadh. The Saudi stock exchange itself and the specialty chemicals business of Saudi Basic Industries Corp. are mulling public listings, as are Emirates Global Aluminium and Adnoc’s fertilizer joint venture Fertiglobe, Boomberg News has reported.