GCC equity markets ease into Eid break after Dubai Residential REIT, Saudi UCIC IPOs
Meanwhile, Saudi Arabia's upcoming Flynas and Specialized Medical Company (SMC) IPOs are expected to inject fresh energy into a market weighed down by the listing of United Carton Industries Co. (UCIC), which closed 1.5% lower last week than on its debut trade.
While UCIC lost ground due to a mix of profit booking, overstretched valuations and tariff threats, Dubai Residential REIT's strong market debut reflects a positive investors' appetite for the emirate's real estate and the sector's strength, analysts said.
The Dubai Residential REIT offering was upsized by the fund manager from 12.5% to 15% after it attracted strong demand across both institutional and UAE retail tranches.
'The offering, which was oversubscribed 26 times with AED 56 billion in gross demand, benefited from Dubai's resurgent real estate market and the REIT's extensive portfolio of 35,700 residential units. A projected 2025 dividend yield of 7.7% further supported the investment case,' said George Pavel, General Manager at Naga.com Middle East. 'In contrast, UCIC's more subdued reception reflects investor unease around its valuation and the broader Saudi stock market's correction. While the Saudi packaging firm managed to raise SAR 600 million with a nine times oversubscription, it listed at a price-to-earnings ratio well above its regional peers. This, combined with broader market volatility, contributed to a choppy debut.'
Pavel said that without a 'compelling growth narrative or sectoral tailwinds comparable to real estate,' UCIC struggled to sustain momentum, 'illustrating the divergent fortunes that can emerge even in an upbeat IPO pipeline.'
Investor sentiment
'The forthcoming listings of Flynas and SMC are set to inject fresh momentum into the GCC's IPO pipeline in the coming weeks,' Pavel said. 'Flynas's remarkable oversubscription, reportedly around 100 times, points to a strong appetite among institutional investors and reinforces confidence in the region's equity markets. This enthusiasm is likely to encourage other companies across the GCC to advance their listing plans, particularly in sectors aligned with economic diversification such as healthcare, consumer goods, and aviation.'
The Saudi budget airline's retail IPO, which closed on June 1 after its institutional offering drew $109 billion, is being called a value proposition by insiders expecting a robust run for the first Gulf airline listing in nearly two decades, backed by Saudi billionaire Prince Alwaleed bin Talal's Kingdom Holding and the kingdom's National Flight Services Co.
SMC, meanwhile, has extended its book-building period to allow qualified investors to review their bids and postponed the retail offering period to June 15.
According to Pavel, the success of two high-profile Saudi listings will 'send a clear signal that well-positioned firms with compelling growth narratives can attract capital despite ongoing global market uncertainties.'
'This should help sustain IPO activity across the Gulf, supporting a healthy pipeline through mid-2025 and potentially broadening investor participation beyond traditional domestic markets,' he added.
Vijay Valecha, Chief Investment Officer at Century Financial, warned of broader headwinds playing a role in how the months after Eid will play out.
'UCIC's weak debut, the only IPO this year to close lower on day one, reflects broader investor caution driven in large part by renewed global trade tensions. The reintroduction of US tariffs under the Trump campaign narrative has sparked uncertainty across markets, especially in regions heavily linked to global trade flows, like the Gulf,' Valecha said.
(Reporting by Bindu Rai, editing by Seban Scaria)
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