High time for Gulf nations to follow UAE IPO’s

The Gulf Cooperation Council (GCC) nations have created an atmosphere that is favorable to attracting private investment and personal savings to pour into the Gulf economy. This is a primary focus in order to successfully achieve the aim of broadening national revenue streams.

The Gulf’s equity markets have experienced significant swings in behavior in recent times, with several achieving the designation of ‘global markets.’ This is particularly evident in the UAE equity marketplace, where IPOs are booming.

Three Critical Aspects

Let us look at three critical aspects that are frequently disregarded by business owners, directors, and top management officials, and so it may help improve the chances of success:

• The primary and secondary markets have different characteristics
• Variations in motives and objectives between pre-IPO and post-IPO participants
• The false belief that Public Relations (PR) and Investor Relations (IR) are interchangeable may result in failure.

Private Equity Transactions

Last year, the price of private equity transactions increased to an all-time record of $1.1 trillion, owing to increased average transaction volumes as investors poured their cash into industries like technology and medical sciences. This resulted in a surge in public-to-private [P2P] transactions. Huge buyout funds, global corporations, and lenders, loaded with cash and spurred by increasing share market values, went on a deal-making frenzy in 2021.

Pitfalls of IPO

• The discrepancy between the IPO offer price and the first-day closing price is known as underpricing
• The 30-day stabilization period following the listing of a business
• The value of a company’s stock compared to a country’s index over a period

Organizations today considering a public offering should be aware of the significant risk of failure. Both issuers and shareholders still have a long way to go to realize the actual market possibilities of listed firms. As IPOs are popular in the UAE, they are essentially non-existent in the other GCC nations. This can be attributed to the lack of efforts by IPO-related organisations, which are turning out to be a serious flaw that should be remedied at the earliest.

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