(Bloomberg) — Abu Dhabi is dangling incentives to revive initial public offerings after a dry spell of nearly four years that’s defied the rally in global stock markets.The Abu Dhabi Securities Exchange, owned by wealth fund ADQ, is reaching out to state-run firms and family-owned companies, according to people familiar with the process. The bourse, known as ADX, is offering sweeteners that include flexibility on the minimum stake size required for share sales and promising to reduce or forgo listing fees, they said, asking not to be named as the discussions are private.The inducements have been enough to get the bourse’s pipeline humming with deals. ADX Chairman Mohammed Ali Al Shorafa Al Hammadi has said it may see at least 10 new listings this year, which would be the most on record.With trading volumes in local equities already suffering from lower oil prices, corporate governance in the United Arab Emirates has also been in the spotlight for investors in the wake of accounting scandals, delistings in Dubai and the experience of large companies such as builder Arabtec Holding, which entered liquidation last year. The Abu Dhabi exchange hasn’t had an IPO since Abu Dhabi National Oil Co. for Distribution PJSC started trading in 2017.“Driving monetization of our assets is part of ADQ’s strategy,” said Mohamed Alsuwaidi, chief executive of ADQ. “By doing that you basically open up the capital markets not just for local but foreign investors also. We plan to take more assets public on ADX.”Spokespeople for ADX and the regulator — the Securities and Commodities Authority — didn’t respond to requests for comment.Fertilizers, DrillingThe list of IPO hopefuls has started to take shape in recent weeks.State-run oil-company Abu Dhabi National Oil Co. is considering selling shares in its drilling business and started preparations for a potential IPO of its fertilizer joint venture in Abu Dhabi. Sovereign wealth fund Mubadala Investment Co. is also close to selling shares in Emirates Global Aluminium PJSC.Others may follow. What’s more, ADX is also floating the possibility of inviting special purpose acquisition companies to list on the exchange after some conditions are met. Alsuwaidi said ADQ is “exploring” other initiatives such as inviting real estate investment trusts, bond offerings and exchange traded fundsADX aims to more than double the bourse’s market capitalization over the next three years. It stood at 750 billion dirhams ($204 billion) at the end of December.But coaxing local firms to list is only half the challenge.The campaign is meeting skepticism from international investors, especially after losses inflicted by a string of delistings of public companies in neighboring Dubai.Dubai Risks Driving Out Investors as Public Companies DelistThe experience could mean some foreign investors will either steer clear of local markets or demand steeper discounts for subscribing to any future IPOs.Payback Time“Companies in the UAE have disappeared from the face of the Earth after taking investors’ money,” said Ekaterina Iliouchenko, a money manager at Union Investment Privatfonds GmbH in Frankfurt. “There have been delistings and money-laundering issues. Given these issues in the past, we’ll require a valuation discount for corporate governance on the potential Abu Dhabi listings.”Both Dubai and Abu Dhabi bourses are regulated by the Abu Dhabi-based Securities and Commodities Authority, whose oversight has faced criticism and took the blame for failing to improve compliance and disclosures among listed firms.Also looming over the plans is a rival exchange in Saudi Arabia, an economy almost double the UAE’s size.Trading volumes in Abu Dhabi still pale in comparison with Riyadh, home to the biggest exchange in the Middle East.But the critical difference may come down to the Saudi regulator’s better track record of enforcing market rules. By contrast, several scandals in the UAE eroded investor confidence.Market RebootStill, change is afoot in Abu Dhabi.The stock exchange has been implementing a series of technical changes aimed at improving trading liquidity and boosting its market size. As a result, trading volumes have surged on ADX this year while remaining subdued on its local competitor in Dubai.The value of stocks traded on ADX this year as of the end of April was more than the total in all of 2020. The trading surge has been driven by increased activity in the top six stocks, which together currently account for 85% of the ADX General Index.As ADX aims to boost its market capitalization, “that can only happen by listing new and bigger companies,” said Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital Ltd. “Liquidity levels improved significantly, and that in itself will make ADX a more attractive market to invest in for institutional and long-term investors.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.