Today's Edition
DUBAI (ALETIHAD)
UAE Investor Pulse Survey 2024, conducted by Edelman Smithfield, a specialised global financial communication advisor, reveal a significant investor appetite for UAE IPO offerings in 2024, with 84% of UAE investors expressing their readiness to invest in future IPOs.
The survey indicates a positive sentiment among investors regarding the valuation of firms that have gone for IPOs in the past three years. Notably, 73% of investors view these firms as fairly valued, underscoring a well-balanced market perception.
Additionally, the survey reveals a significant vote of confidence among investors in the book-building process, considered a critical aspect of IPOs. An impressive 71% of investors have expressed trust in the book-building process, indicating a high level of satisfaction and faith in its transparency and efficacy.
Another noteworthy finding is that approximately two-thirds (67%) of respondents agree that having two distinct exchanges benefits the UAE capital markets and offers increased investment opportunities.
In light of these findings, Simon Hailes, Managing Director and Head of Middle East at Edelman Smithfield, remarked: “It’s encouraging to witness the growing investor confidence in the UAE markets and their strong appetite for UAE IPOs.”
However, he said it’s crucial for potential and existing issuers to prioritise transparent and consistent communication efforts to maintain this IPO momentum.
Hailes added: “With the region increasingly recognised for its economic vitality and investment potential, our insights strongly support the growing investor interest in UAE capital markets.”
The survey highlighted several key parameters for a successful IPO. Sixty-five per cent of investors seek transparent IPO communications to make informed decisions. A majority of investors (63%) emphasise the positive impact of well-produced roadshow videos on their willingness to invest in an IPO.
The use of the money raised through the IPO is a key consideration for investors.
Sixty seven per cent of them consider the use of proceeds when evaluating potential IPO investments.
Earnings’ record is also another prime consideration. Overwhelming majority of investors (82%) emphasise the importance of quality earnings in evaluating investment opportunities. Profitability (41%), strong balance sheet (31%), and brand awareness (27%) are key metrics for evaluating companies going public.
Majority of investors (71%) prefer new issuers with organic growth plans. There’s a push for increased clarity and availability of medium-term guidance on a quarterly basis. Real estate (51%), tech (41%), and healthcare (33%) are the top sectors of interest from an IPO perspective.
The global economy experienced a slower growth rate in 2023, marked by high interest rates, inflation, and geopolitical tensions. However, the UAE’s resilience resulted in positive IPO market conditions, which saw the country contribute a stellar 58% of 2023 IPO proceeds in the GCC.
