Unlocking the potential of IPOs

In the last few years, the UAE has solidified its position as a leading hub for initial public offerings (IPOs) in the Middle East. In 2024 alone, companies in the UAE raised over US$6.2 billion across eight listings. This significant activity is underpinned by the nation’s commitment to enhancing its capital markets and attracting regional and international investors.

To sustain this momentum, the UAE government has introduced several strategic initiatives. These include the creation of the AED 5 billion Abu Dhabi IPO Fund (ADIPOF), which supports regional firms seeking listings on the Abu Dhabi Securities Exchange (ADX), and the relaxation of the minimum free float requirement , making the listing process more accessible. Additionally, the implementation of price stabilisation mechanisms has enhanced post-listing performance and investor confidence. As a result, the market conditions remain conducive for entities looking to go public.

Depending upon the maturity, it can typically take a company anywhere between 9 to 18 months to be IPO ready. During this journey, it is exposed to various new challenges, increased regulations, and heavy scrutiny, which is often an unfamiliar territory. These inherent complexities can easily jeopardize the timelines set by the management and hence meticulous planning is imperative to ensure the company's readiness. Resolving issues early on will allow companies to file at the most opportune moment and maximise their chances of success.

While IPO activity in early 2025 has seen a temporary softening, the current environment presents a valuable preparation window for companies, particularly their finance functions. The finance function is usually poised to play a central role in spearheading companies' IPO endeavours and needs to work seamlessly with cross-functional teams. Their proactive readiness from a financial reporting perspective can bring out significant efficiencies in the overall journey. To help finance teams navigate the IPO process, we highlight five key areas for a company deciding to go public.

Having the audited historical financial statements of the ListCo ready is a key IPO prerequisite, as they form the basis for analysis, valuation, and investor decision-making. Typically, a three-year period is required, though this may vary by exchange. Often, companies reconsider their corporate structure midway, either to achieve optimal tax structures or for broader strategic reasons. However, such changes can result in significant delays and re-audits, potentially jeopardizing the IPO timeline. A clearly defined perimeter, supported by flexible, well-organised data, allows for an agile IPO readiness process and enables the crafting of a coherent equity story.

The bar for readiness from the finance function of a public company is significantly higher. There are numerous incremental activities that the finance team will need to undertake once it goes public, such as complying with quarterly reporting requirements, performing financial planning and analysis (FP&A) and conducting investor meetings. To meet these demands, the finance team should reassess its structure and skills required, identify new responsibilities, and establish key roles—typically including a head of FP&A, an investor relations officer, and a tax accountant.

A public listing exposes companies to elevated scrutiny from regulators, auditors, and shareholders. Finance leaders must evaluate whether their internal control environments are robust, documented, and aligned with best practices for listed entities. This includes formalising internal audit functions, documenting policies, and ensuring that key financial processes are properly controlled and auditable. A well-designed control environment inspires investor confidence and reduces the risk of misstatements.

A public listed company is expected to maintain transparency in their communications with investors by providing timely and accurate information about their financial performance, operations, related party transactions and future outlook. The company should consider implementing suitable systems and processes that provide accurate data, support real-time analysis and reporting for different scenarios and forecasts.

IPO-bound companies must ensure their accounting policies and treatments are robust, well-documented, and compliant with relevant standards. Complex areas, such as revenue recognition, share-based payments, or business combinations, should be addressed early with clear documentation. Restatements shortly after listing can significantly undermine credibility and valuation. Pre-emptive technical reviews reduce this risk and demonstrate financial maturity to investors and regulators.

The IPO journey is not just a financial milestone; it is an intense test of operational readiness. Finance functions addressing the five areas outlined above will reap the benefits of not only de-risking the IPO process but also building the foundation for sustainable performance as a listed entity. Given the current momentum, this preparatory period is not just timely but also strategic.