An Emirati investor follows the movement of shares at the Dubai Financial Market (file). The market has risen 17% this year, prompting more companies to plan sales in 2015.

Bloomberg

Dubai

The UAE’s stock market regulator is working on rules that would make it harder for start-up companies to sell shares in an initial public offering, according to four people with knowledge of the matter.

The regulator will only approve applications from start-ups in areas not represented on the UAE’s stock exchanges and of strategic importance to the economy, three of the people said, asking not to be identified as the plans are private.

The proposed regulations follow several so-called greenfield IPOs in the UAE this year, where companies with no operating track record raise money at a nominal value, usually 1 dirham a share, to start operations and fund business plans.

Dubai Parks & Resorts raised 2.5bn dirhams ($680mn) in November to fund construction of a theme park in the emirate, while Amanat Holdings generated 1.38bn dirhams the previous month to pursue healthcare and education investments in the six-nation Gulf Cooperation Council.

Shares in Dubai Parks dropped 9% on the first day of trading, while shares in Amanat dropped 12% when they began trading. Both are still trading below their IPO price. Retail operator Marka, the first company to list shares on Dubai’s exchange since 2009, trades above the nominal IPO value.

Companies in the UAE generated $3.74bn from share sales this year, compared to $774mn in 2013, according to data compiled by Bloomberg. The year’s biggest offering was the $1.58bn raised by Emaar Malls in September.

The Dubai Financial Market has risen 17% this year, prompting more companies to plan sales in 2015. Daman Investments expects to sell 55% of its equity in the first quarter, chairman Shehab Gargash said on November 3, while Emaar Properties is also planning to sell shares in its hotels business, chairman Mohamed Alabbar said in Dubai on September 29.

The Abu Dhabi Securities Market, which has risen 5.9% this year, hasn’t had an IPO since 2011, according to data compiled by Bloomberg.