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21 April 2024

UAE IPOs could be priced through book-building

By Agencies


Pricing of UAE initial public offerings could be determined through a bookbuilding for the first time, the Gulf Arab state's stock market regulator said.

Under current rules, IPOs in the second-largest Arab economy are set at a fixed price of 1 dirham ($0.272) per share and may include a premium or service fee, often bearing little relation to demand.

The Securities and Commodities Authority would have the right to decide on how future IPOs would be priced, it said after a board meeting on Tuesday, according to state news agency WAM.

"The authority would have the capacity to set the method of pricing securities in IPOs whether through underwriting or book building or any other way that might emerge in the future," the regulator said.

The country reformed IPO rules earlier this year by allowing family businesses to retain up to 70 per cent of firms they put up for sale, up from 45 per cent earlier.

IPOs in Saudi Arabia, including billionaire Prince Alwaleed's Kingdom Holding Co introduced bookbuilding techniques for the first time this year.
In Europe, stock market candidates usually offer shares in a price range to test investors' appetite and determine the IPO price only after roadshows shortly before the debut. (Reuters)