Some 84% of UAE investors likely to invest in future IPOs: survey

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UAE investors have shown significant appetite for IPO offerings in 2024, with a majority (84%) of UAE investors expressing their readiness to invest in future IPOs.

These are the findings from the landmark UAE Investor Pulse Survey 2024, conducted by Edelman Smithfield, a specialised global financial communication advisor.

The survey indicates a positive sentiment among investors regarding the valuation of firms that have undergone IPOs in the past three years. Notably, 73% of investors view these firms as fairly valued, underscoring a well-balanced market perception.

Vote of confidence

Additionally, the survey reveals a significant vote of confidence among investors in the bookbuilding process, considered a critical aspect of IPOs. An impressive 71% of investors have expressed trust in the bookbuilding 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: “Our Investor Pulse Survey provides valuable insights into investor sentiments and expectations regarding the region's capital markets. It's encouraging to witness the growing investor confidence in the UAE markets and their strong appetite for UAE IPOs.

Transparency and communication

“However, to maintain this IPO momentum, it's crucial for potential and existing issuers to prioritise transparent and consistent communication efforts. Our survey findings validate this, revealing that two-thirds of investors expect transparency and effective IPO communication from issuers to make informed decisions.”

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.”

Other key findings from the Edelman Smithfield’s UAE Investor Pulse Survey 2024 include:

Transparency and Communication:

•65% of investors prioritise transparent IPO communications for informed decisions.

•63% highlight the positive impact of well-produced roadshow videos on IPO investment willingness.

Use of Proceeds:

•67% consider the use of proceeds when evaluating potential IPO investments.

Evaluating Investment Opportunities:

•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.

Investment Plans and Guidance:

•71% of investors prefer new issuers with organic growth investment plans.

•There's a push for increased clarity and availability of medium-term guidance on a quarterly basis.

Board Preferences:

•Investors prefer boards with diverse experience, including overseeing publicly listed entities (82%), cybersecurity (84%), and ESG (84%).

Sector Interest:

•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 c.58% of 2023 IPO proceeds in the GCC.-