SMEs granted their wish list
Dubai on Tuesday launched a new stock market, Nasdaq Dubai Growth Market, for emerging companies and small and medium enterprises (SMEs) to raise capital through an initial public offering (IPO).
Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council, launched the new market under the umbrella of Nasdaq Dubai.
It allows SMEs to list businesses valued below $250 million (Dh917.5 million) with a minimum operating history of one year as compared to three years for Nasdaq Dubai’s main market.
Like Nasdaq Dubai’s main equity market, the Growth Market will allow owners of an enterprise to carry out their IPO while selling as little as 25 per cent of the shares in their company.
Nasdaq Dubai intends to launch the Growth Market in early 2021 in line with the first IPOs. A number of companies have already appointed advisors to begin the IPO process, an official statement said on Tuesday.
The Nasdaq Dubai Growth Market will not only list companies from the UAE, but also from around the world to help them expand in the region and internationally.
Nasdaq Dubai is working with government bodies, UAE free zones and expert advisory companies as partners to launch the new stock market. The advisors will include financial advisory firms, investment banks, law and accounting firms which will provide tailored support including pre-IPO awareness and readiness exercises.
Companies that are not ready for an IPO will be able to join the Private Market segment of the Growth Market. On the Private Market a company’s shares are held for safekeeping in Nasdaq Dubai’s Central Securities Depository (CSD). This is designed to give confidence to investors and moves the company into an exchange environment ahead of a potential listing, said the statement.
“SMEs are a key engine of our national economy. The launch of the Nasdaq Dubai Growth Market is a strategic step that will support this vital sector by opening new horizons for its companies and providing them with investment resources to expand their business and enhance their attractiveness in global markets," said Sheikh Hamdan.
Dr Ahmad Belhoul Al Falasi, UAE Minister of State for Entrepreneurship and SMEs, said during the recently-held Annual Investment Meeting (AIM) 2020 that SMEs are significant contributors to the global economy, representing 90 per cent of businesses and over 50 per cent of employment worldwide.
“In the UAE, SMEs are backbone of the economy, contributing almost 50 per cent to the GDP,” he said during the summit.
“The Growth Market is set to play a key role in the future of capital-raising and the channeling of investment to enterprising companies to enable them to succeed during all phases of the business cycle supported by their Dubai listing,” said Essa Kazim, governor of Dubai International Financial Centre and chairman of Dubai Financial Market.
“The Nasdaq Dubai Growth Market has been strategically designed to attract a wide range of companies across a variety of sectors and geographies, with a straightforward listing process to provide a seamless journey to going public,” said Hamed Ali, CEO of Nasdaq Dubai and deputy CEO of Dubai Financial Market.
Anish Mehta, chairman at The Institute of Chartered Accountants of India, Dubai chapter, said SMEs play an important role in any economy and establishment of the new bourse is a step in the right direction.
“As it is commonly used that ‘one size does not fit all’. This also applies in relation to raising finances by SMEs who cannot go to large stock exchanges to fulfill their finance needs and have to look to the banks. With the launch of ‘Nasdaq Dubai Growth Market’, similar to Alternative Investment Market in London, it will open doors for SMEs to have equal opportunity to expand their business and fulfill their financing needs at much affordable costs,” he said.
He said the new bourse will promote more corporate governance and compliances.