IPOs in Dubai: A unique opportunity for foreign investors

Renowned for its economic dynamism and openness to foreign investments, Dubai has established itself as a favored destination for global investors. Initial Public Offerings (IPOs) present a remarkable opportunity for investors looking to diversify their portfolios and capitalize on the rapid growth of businesses in the region. In this article, Magellan explains why IPOs in Dubai are attractive and how foreign investors can benefit from them.

What are IPOs?

An initial public offering (IPO) is the process by which a private company sells its shares to the public for the first time. This mechanism allows the company to raise capital to fund growth, repay debts, or invest in new projects.

Key stages of an IPO

• Preparation: The company assesses its financial situation and selects advisors (investment banks, lawyers, accountants).
• Due diligence: This step involves rigorous financial audits and the drafting of a detailed prospectus about the company, its finances, operations, and risks.
• Marketing: This involves promoting the IPO to institutional investors through presentations (roadshows).
• Stock exchange listing: Shares begin trading on a stock exchange on the day of the launch.

Benefits

• Capital Access: Significant fundraising.
• Visibility: Enhances visibility and credibility.
• Liquidity: Initial shareholders can sell their shares.

Drawbacks

• Regulation: Strict compliance and regular disclosure of financial information.
• Volatility: Share prices are influenced by market forces and investor expectations.

Why is Dubai attractive for IPOs?

Dynamic economic environment

Dubai is known for its flourishing economy and political stability. The Emirate is at the heart of numerous government initiatives aimed at fostering innovation and attracting foreign capital. Dubai has a particularly vibrant IPO market, which provides the ideal environment for companies to raise funds and expand.

Growing sectors

Key sectors such as real estate, technology, and healthcare are rapidly growing in Dubai, offering substantial investment opportunities, especially during local companies’ public debuts. Foreign investors can, therefore, participate actively in this expansion and potentially achieve high returns.

Favorable tax regime

Dubai offers a tax-friendly environment for foreign investors, considering that there are no capital gains taxes or dividend levies, maximizing foreign investors’ profits. Moreover, the streamlined purchasing procedures and foreign investment protections enhance investor confidence.

Dubai’s growing IPO market

The “UAE Investor Pulse Survey 2024” by Edelman Smithfield shows significant enthusiasm among investors for Dubai’s IPOs. According to the survey, 84% of investors in the UAE are ready to invest in future IPOs. This confidence is bolstered by the positive perception of companies that went public in the last three years, with 73% of investors considering these companies to be fairly valued.

How can foreign investors benefit from Dubai’s IPOs

Transparency and communication

Transparency is crucial for investors. The survey reveals that 65% of investors prioritize clear communications to make informed decisions. In fact, companies listed in Dubai are required to provide detailed information about their finances and operations, reassuring foreign investors.

Use of funds

When evaluating investment opportunities, 67% of investors consider the use of raised funds a critical factor. Companies in Dubai are transparent about their fund utilization plans, allowing investors to understand how their capital will generate value.

Organic growth

In general, investors prefer companies with clear organic growth plans. 71% of investors favor new issuers with growth-focused investment plans. Overall, Dubai provides a favorable environment for business growth, with easy access to regional and international markets.

Diverse Boards

Boards that include cybersecurity and ESG (Environmental, Social, and Governance) experts are highly valued. Investors believe that diverse boards are better equipped to navigate complex economic environments and ensure company sustainability.

Why choose Magellan as your expatriation advisor?

While investing in Dubai’s IPOs is promising, foreign investors need specialized guidance to navigate the market. By making Magellan your expatriation advisor, you will benefit from deep insights into investment opportunities in Dubai. We support investors on every step of their project, from selecting the most promising IPOs to providing administrative and tax assistance. Our team ensures a smooth and secure investment experience.

Conclusion

Investing in Dubai’s IPOs offers a unique opportunity for foreign investors drawn by the region’s economic dynamism, transparency, and favorable tax regime. By leveraging Magellan’s expertise, you stand a better chance of thriving in one of the world’s most flourishing markets.

Article source:

IPO appeal: 84% of UAE investors likely to invest in future offerings – gulfbusiness.com