Page 102 - ALEF EDUCATION PR REPORT NOVEMBER 2024

The same is true if allocations are too large – there is little reason to buy more. "In fact, you’re more
likely to sell to reduce your exposure," Kamal says.

Pricing is also pivotal. Companies that went public at the start of this flurry of IPOs tended to be
more generously priced for subscribers. This has helped some stocks to surge.

Recent IPOs have been priced at higher earnings multiples, however, and so many have struggled to
make further gains.

“Even if a company is a high-quality business, if there’s little upside potential due to expensive IPO
pricing there’s little incentive to buy the stock,” says Kamal.

Dewa and Fertiglobe are flat versus their respective IPO prices – as is Lulu Group, which made its
bourse debut last week. Borouge, PureHealth and Spinneys have gained less than 5 percent since
listing.

Kamal cites Lulu as a cautionary tale. The supermarket chain planned to sell 25 percent of its
shares, but investor demand led the company to increase this to 30 percent.
“IPO subscribers received more shares than they expected so there hasn’t been sufficient buying
demand to push the stock higher,” says Kamal. “Every asset has a price. It doesn’t mean a company
is a bad asset if it struggles after listing, it’s more that its IPO wasn’t priced well.”

Further US interest rate cuts, which will reduce returns on cash savings accounts, could brighten
the allure of recently listed UAE companies that offer strong, consistent dividends, says Kamal.

“Liquidity is very important,” he adds. He points to Saudi Arabia where the bourse trades at a
premium to those in Dubai and Abu Dhabi because it has bigger volumes and turnover.

"If there were some successful initiatives to increase trading and free float on UAE markets, this
would boost company valuations.”

https://www.agbi.com/analysis/markets/2024/11/government-backed-uae-companies-share-
price-ipos-dubai-abu-dhabi/