Daman Investments, a Dubai-based investment manager, has launched a new fund that will invest in UAE IPOs to capitalize on the frenzy of IPO activity in the country’s capital markets.
The Daman UAE IPO Fund will provide institutional and professional investors with exposure to UAE companies with the potential for significantly higher returns than UAE equity indices, Daman said in a statement on Monday.
With the UAE government’s ongoing program to sell stakes in state-owned companies increasing dynamism in capital markets and improving liquidity, the new fund offers strong potential for capital appreciation, the company said, without specifying the size of the investment vehicle.
“Since its inception, Daman Investments has been a pioneer in creating differentiated product offerings that have created long-term value for our clients,” said Shehab Gargash, Chairman of Daman Investments.
Building on its legacy, the company has launched the UAE IPO Fund, which will allow investors to benefit from “a period of strong capital markets activity”.
The fund, which is expected to pay dividends quarterly and annually, will also invest in companies that have been publicly listed in the past two years and “have yet to reach their full potential for return on capital,” said Ahmed Khizer Khan, Daman’s chief executive. said.
In contrast to capital markets in the US and Europe, which have plummeted amid inflation worries and fears of a looming recession, the UAE has seen a flurry of IPOs, with various state-owned companies listing their shares.
Dubai last year announced plans to list 10 state-owned companies to increase the size of its financial market to about Dh3 trillion ($817 billion).
The emirate also plans to set up a Dh2 billion market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.
Salik, Dubai’s only toll operator, is the latest state-owned company to sell its stake in the emirate.
The company raised Dh3.735 billion from its IPO on the Dubai financial market earlier this month in a deal that was more than 49 times oversubscribed across all tranches.
Total gross demand rose to $50.2 billion, showing strong appetite for state-owned company stocks.
The Salik deal followed the Dubai Water and Electricity Authority’s IPO. The utility raised Dh22.41 billion from its IPO, making it the largest IPO in the Middle East and Europe since Saudi Aramco went public in 2019.
Tecom, the emirate’s business district operator, also made its DFM debut in early July after raising Dh1.7 billion in its IPO a month earlier.
Since its inception, Daman Investments has been a pioneer in creating differentiated product offerings that have created long-term value for our clients
Shehab Gargash, Chairman of Daman Investments
In Abu Dhabi, Burjeel Holdings is the latest company to list its shares on the Abu Dhabi Securities Exchange. The healthcare provider will sell 11 percent of its share capital, it said on Monday.
A string of IPOs in the Arab world’s second-largest stock market has significantly improved liquidity and foreign investment in the ADX, anchoring it as one of the world’s best-performing stock markets in 2021.
Its market value rose to AED2.25 trillion (US$614 billion) at the close on Friday.
Listings in the Abu Dhabi market this year include Borouge and Abu Dhabi Ports Group.
Nine companies listed on the stock exchange last year, including Adnoc Drilling, Fertiglobe, Alpha Dhabi and Yahsat.
Last year, Abu Dhabi also announced a Dh5 billion IPO fund to encourage and support private companies to list on the local stock exchange.
“Due to the strong macro outlook and structural reforms…we launched the Daman UAE IPO Fund to become part of the UAE’s economic growth story,” said Mr. Khan.
Updated September 26, 2022 at 11:00 am
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