The UAE's follow-on market is already lining up for a 4Q reopening, even as its IPO pipeline stays frozen

While the UAE has just one live IPO hopeful left this year, its follow-on pipeline is looking promising. Abu Dhabi Islamic Bank (ADIB) last week signed off on a proposal to raise AED 1.75 bn through a rights issue, subject to shareholder and Central Bank of the UAE approval, and Taaleem, the DFM-listed school operator, is weighing a secondary share sale as one of several options available to support its AED 1.5-2 bn expansion plans, CEO Alan Williamson told EnterpriseAM recently. While there’s no clear timeline for that, it’s another sign that capital-raising plans are still very much alive at UAE companies, with follow-ons and secondaries still seen as a viable route.

These moves follow a muted first half of the year, in which the UAE saw just one major follow-on transaction: Sharjah Islamic Bank's USD 701 mn raise through an AED 2.59 bn rights issue. The transaction — the region's largest follow-on issuance in 1H — was backed by Sharjah's government to strengthen capital buffers and support asset growth.

It wasn’t just the UAE — the war put the region’s capital markets on ice. MENA equity issuance fell 71% y-o-y in 1H as the Iran war pushed issuers to reassess plans, while IPO activity also thinned sharply. UAE names have already tapped the brakes, with Dubai Holding reportedly pausing plans to list its retail assets, EGA pushing its IPO to at least next year, and Binghatti shelving IPO plans earlier in the year. Only one IPO might survive: Dubai Investments said in May it remains committed to pursuing an IPO of a 24% stake in Dubai Investments Park before the end of 2026, subject to regulatory approvals and ongoing discussions with banks and investors. The firm had flagged a potential listing in October.

The good news: Analysts expect secondaries and follow-on offerings to pick up in 4Q. Kamco Invest’s director of investment strategy and research, Junaid Ansari, expects to see more secondary offerings if regional conditions improve, especially from state-owned listed companies. His base case is that large, liquid, government-linked names move first, with new listings following only once the outlook stays steady.

The earlier lull looks like delayed activity, not disappearing demand. Ubhar Capital Head of Research Tahir Abbas tells us geopolitical tensions have been the main factor keeping sellers out, while Ansari says shareholders are waiting for valuations to recover and for better visibility on anchor demand before launching. He also points to stretched valuations earlier in the year, weak dividend yields, wider bid-ask spreads, and allocations moving toward US and AI-driven markets.

Why follow-ons and secondaries could move first

They have an execution advantage when markets are jumpy. Secondaries are “far easier to execute in a choppy market than IPOs,” Ansari says, adding that demand for follow-ons could more easily outpace IPOs in the current environment. Accelerated bookbuilds and overnight blocks specifically are likely to lead any reopening because they are quick and carry limited pricing risk.

Why? Because established names have an edge during periods of volatility. Investors in a follow-on can assess an operating track record, visible earnings, liquidity, and a reference price, Abbas says, while new IPOs face greater scrutiny around valuation and post-listing performance.

Abbas also expects a pickup in activity come 4Q, but says the recovery will be “more selective and transaction-specific” after the latest escalation raised the hurdle for sellers. “The distinction is increasingly about valuation rather than IPO versus secondary,” he says. Arqaam Capital Head of Execution and Syndicate for ECM Rawad Kassouf agrees, saying he sees healthy demand for both, but that investors are increasingly focused on “valuation and earnings visibility.”

Kassouf also expects block trades and follow-ons to remain particularly relevant, with larger strategic sell-downs coming where there is a clear underlying rationale.

The strategic sell-down playbook

Secondaries have become one of the more durable stories in UAE capital markets over the past year — and there's a reason they've been so popular. Secondaries in the UAE are becoming less about giving one shareholder an exit and more about increasing freefloat, widening institutional ownership, supporting index eligibility, or recycling capital.

There is already a well-tested playbook for that: UAE follow-on issuance nearly tripled in the first nine months of 2025, with state-linked shareholders driving much of the activity. Mubadala’s AED 3.15 bn du sell-down, for example, lifted the telco’s freefloat to 27.7%, paving the way for its MSCI inclusion last month. It was also the UAE’s first fully marketed secondary share offer — a departure from the accelerated overnight bookbuilds typically used for regional sell-downs.

What 4Q could look like

Don’t expect the floodgates to open. The first transactions are more likely to be quick, targeted transactions in established names than jumbo strategic exits. Larger sell-downs normally come later in a reopening cycle because they can create an overhang and signal that valuations may have peaked, Ansari says. Kassouf expects them to remain concentrated in liquid, benchmark-scale companies where a transaction can materially improve freefloat and institutional ownership.

ADIB’s planned raise, cited above, fits that profile — an established, liquid name with a clear reference price (a 28.8% reduction to its last closing price before the rights issue was announced) — the type of transaction Ansari and Kassouf both expect to lead the reopening.

The bigger test may be how much capital is waiting when everyone comes back. Postponed IPOs, secondary sellers, and other Gulf pipelines could all be chasing investors at roughly the same time. Ansari expects exactly that once conditions improve: “There will be competition for capital in the region.”