The Ernst & Young report on IPO activity for the fourth quarter of 2020 in the Middle East and North Africa region indicated that 9 IPO deals were registered, amounting to $ 1.86 billion, with a decrease in the total number of IPOs by 40% and revenues by 94% compared to 2019. 6 out of 9 underwriting deals in the real estate sector, two of which were for real estate investment funds (REIT). As for the remaining three deals, they were for the health care, consumer goods and insurance sectors.
Alison Hubbard, Head of Legal Department in the Middle East and North Africa at Ernst & Young Law, said: “The amendments to the Companies Law in 2020 are considered a good opening for the overall development of the financial markets in the UAE. After the increase in flexibility towards foreign ownership and the amendments that dealt with the citizenship conditions for members of the Board of Directors and the increase in the percentage of capital that owners are allowed to put up for public subscription, for example but not limited to, it is expected that the number of public IPOs nominated for listing in the UAE will increase.
The year 2020 witnessed the launch of several new initiatives in the UAE aimed at boosting IPO activity in the coming years. Amendments to foreign ownership and listing requirements were among the most important of these initiatives, as they include major changes in the regulations governing the work of commercial companies, and cancel the historical requirement that at least 51% of the company’s capital be owned by citizens, and foreigners are now entitled to own 100% of the shares. Local companies. These changes also extended to IPO activity, as well as mergers and acquisitions. Founders of private joint-stock companies are now entitled to put up to 70% of their capital in the company through public subscription, instead of 30% previously. This limit can also be raised after obtaining the approval of the United Arab Emirates Securities and Commodities Authority.
In Abu Dhabi, “Sawaeed Holding”, “EasyLess”, “Palm Sports” and “Z Store” companies were listed on the second market platform of the Abu Dhabi Securities Exchange for private joint-stock companies in the fourth quarter of 2020. ADQ company also launched Holding »; The full shareholder in the Abu Dhabi Securities Exchange, “Q Market Industry” company during the fourth quarter of 2020, is expected to receive the funding allocated to the economic stimulus package in Abu Dhabi to enhance liquidity in the Abu Dhabi Stock Exchange.
During 2020, the public offering of the shares of the Al Mal Capital REIT fund achieved $ 95.3 million, and the fund was officially listed on the Dubai Financial Market on January 18, 2021, which is the first public offering in the UAE in several years. This was the first listing of real estate investment funds on the stock exchange, which increased the total listings of these funds in the UAE to 3, with the previous listings of Emirates REIT and Emirates NBD REIT on Nasdaq Dubai. At the beginning of the fourth quarter of 2020, the Dubai Financial Market launched its individual share futures trading platform. During the same quarter, Nasdaq Dubai announced its intention to launch the Nasdaq Dubai growth market to support startups and small and medium enterprises in early 2021. The regulatory framework updates helped create this market after consultations with market participants.
Matthew Benson, head of deals and strategy advisory services in the Middle East and North Africa at EY, said: “With the beginning of 2021, we believe that continued fiscal stimulus measures, ample liquidity and increased confidence in coronavirus vaccination programs will contribute to maintaining this positive performance.
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