Dubai focuses on pre-IPO stage for startups

Wam

Dubai Financial Market (DFM) is focusing on supporting startups in the pre-initial public offering (IPO) stage to raise capital and connect them with potential investors, CEO Hamed Ali has said.

“Diversifying the investor base is one of the top priorities for DFM,” Ali was quoted as saying in an interview with the UAE state-owned Wam news agency. 

The DFM is actively looking to expand beyond established companies, focusing on startups and adding new sectors, he added. 

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Venture capital funding in the UAE declined 45 percent year on year to $691 million, Magnitt said in its Mena Venture Investment Summary for 2023. However, the Gulf state was still the region’s top destination for deals, which reached 158 last year.

The DFM launched Arena, a platform for initial private offerings, which includes private companies, family conglomerates, small and medium enterprises, and businesses at various growth stages. 

The platform will allow companies to access capital through diverse assets such as equity and debt, with plans to introduce additional asset classes in the future.

Additionally, venture capital firms can expand their investor base by selling private market shares, establishing a previously unavailable liquidity pool.

Speaking at the Mena Capital Market Summit this week, Ali said that the market attracted around 44,000 new investors in the first quarter of 2024, representing 10 times the average for the five years before 2019. 

Around 85 percent of them were international investors.

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“Over the past two years, we have exceeded annual records in attracting new investors, and last year 73 percent of them were international investors.” 

Ali said that the increasing weight of Gulf exchanges in the emerging markets index indicated confidence in their ability to attract liquidity to the market.

He said eight IPOs collectively raised around AED35 billion ($9.5 billion) in capital, with subscription requests exceeding AED1 trillion.

The record-breaking interest in supermarket giant Spinneys’ upcoming listing on the Dubai Financial Market could start a rush of private listings in the UAE, industry experts told AGBI this week.

Spinneys’ imminent IPO marks a rare listing from the private sector. The company received more than $19 billion in orders for its $375 million IPO, which was 64 times oversubscribed, according to a statement on Wednesday. Interest in the company was 35 percent international and 65 percent regional.

Rudy Saadi, managing director and head of Mena equity capital markets at Citi Bank, said $2 billion had been raised through IPOs in the UAE in the year to date.

“We are seeing more private companies going public, which is fantastic,” he said.

“We’d like to see more companies coming to list sooner because obviously the demand is there,” Hitesh Asarpota, chief executive office of Emirates NBD Capital, said.