Experts Optimistic of Dubai’s Capital Market, as TECOM Group Debuts on DFM
Shares of Dubai’s TECOM Group rose in early trading on Tuesday, when its shares debuted on the Dubai Financial Market following one of the emirate’s biggest initial public offerings in recent years.
Trading under the symbol “TECOM,” its share price rose over 1 percent to AED 2.7 just minutes after it hit the bourse.
The company, which operates some of Dubai’s major business districts, raised around AED 1.7 billion in its IPO. The global offering was oversubscribed 21 times, it said, while the UAE retail offering has an oversubscription of almost 40 times, with total demand reaching more than AED 35 billion.
“The listing of TECOM Group on the DFM is a milestone event for the Emirate of Dubai and a historic moment for the Company. As a publicly-traded company, TECOM Group will offer investors the opportunity to benefit from a central player in Dubai’s business hub proposition and from a company that is well-positioned to take advantage of Dubai’s market opportunities and its attractive underlying macroeconomy,” Malek Al Malek, its chairman, said in a statement.
The IPO comes as Dubai, and the wider Arabian Gulf region, aims to develop its capital market scene – in part because of an ongoing bid to modernise regional economies away from oil reliance.
“Whilst the global capital markets seem to be on freeze for now, IPOs remain a hot topic across the UAE,” Salmaan Khawaja, a partner at the transactions advisory unit of Grant Thornton, told Arabian Business.
He said TECOM Group’s attractive dividend yield for investors “conveys a strong message of stability to shareholders in these times of volatility elsewhere across the globe.”
“If this regional trend towards oversubscribed IPOs continues then the Dubai stock exchange can be a serious beneficiary of this positive investor sentiment and strong levels of capital inflows being experienced in the region,” he explained.
Khawaja said he expects to see more IPOs from the private sector in the near term, “which will inevitably give further credence to the maturity of the capital markets in the UAE at a global level.”
Another expert said the TECOM Group listing “provide local investors more depth in the market.”
“The government is hoping to attract foreign capital to invest in these companies not only in the primary market but also in the secondary market,” Majd Dola, an equity portfolio manager at First Abu Dhabi Bank, said.
He noted how the recent IPO is already the second in Dubai this year, “and for sure is not the last over the next 12 to 18 months,” he added.