In today’s volatile economy, there is one crucial area that our nation could capitalise on – Initial Public Offerings (IPOs). By enabling more companies to go public, the UAE can stimulate economic growth, create new jobs, and enhance its overall GDP.
IPOs are an essential tool for companies looking to raise capital beyond private equity or venture capital, and take their business to the next level. By going public, companies gain access to a much larger pool of investors, which can translate into bigger expansion plans, more resources, better R&D and a wealth of opportunities. This in turn can lead to increased productivity and ultimately a boost to the nation’s GDP.
Adherence to the compliance obligations of an IPO is a guarantor of financial stability among companies and economies. For instance, due diligence and a company’s prospectus required for an IPO ensure that financials are in order, and that the company has a sound business plan enabling it to grow and prosper.
This process provides investors with the confidence that they are investing in a robust business with growth potential. By meeting IPO requirements, companies demonstrate their commitment to transparency and accountability, which are crucial ingredients for any successful business.
Accountability is a key factor in maintaining public trust in business, and public companies are required to be more transparent in their financial statements as they are subject to higher scrutiny than private ones. Public companies must comply with laws and regulations that enhance transparency and efficiency, making them more trustworthy and creating a positive impact on the overall reputation of the national economy.
In the past decade, accountability has become more elusive for LLC companies in the UAE. Prior to the 2008 financial crisis, business owners upheld strong ethical standards. In the aftermath of the crisis, accountability levels have declined. This trend highlights the need for renewed emphasis on ethical conduct and compliance. This is not the case with public companies, which know that they will be under greater scrutiny.
A lack of accountability has a severe impact on the economy as a whole, resulting in an increase in non-performing loans and insolvencies. In this context, going public represents an indirect remedy.
Considering an IPO is a strategic decision, and it’s not suitable for all companies. Those who choose to go public must be prepared to be more accountable, transparent, and follow legal requirements. By adhering to IPO regulations, businesses can benefit from enhanced governance practices, access to new liquidity, and the opportunity to participate in the overall growth of the UAE’s economy.
An increase in IPO activity would stimulate investment in the UAE, enhancing the country’s long-term financial stability and prosperity.