KHALEEJ TIMES, Wednesday, Oct 13, 2021 | Rabi Al-Awwal 7, 1443
Abu Dhabi launches Dh5b IPO fund to support SMEs
Emirates:
Abu Dhabi’s Supreme Council for Financial and Economic Affairs on Tuesday
launched a Dh5 billion IPO fund to beef up the activities of Abu Dhabi
Securities Exchange (ADX) and position it a leading stock market.
The IPO fund will invest in five to 10 private companies per year, with a focus
on small and medium enterprises (SMEs). It will have a target ticket size of
between 10 per cent and 40 per cent of the float, the Abu Dhabi Media Office
added.
The fund was
launched under the directives of the Supreme Council for Financial and Economic
Affairs, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, member of the Abu Dhabi
Executive Council, Chairman of the Abu Dhabi Executive Office, and member of the
board of Abu Dhabi Supreme Council for Financial and Economic Affairs.
The fund, which will be overseen by the Supreme Council for Financial and
Economic Affairs and managed by the Abu Dhabi Department of Economic Development
(ADDED), will help private companies grow and support them through the IPO
process by providing liquidity and by promoting equity research.
Sheikh Khaled emphasised the fund’s significance in further strengthening Abu
Dhabi’s reputation as a dynamic and diversified investment environment and
praised ongoing efforts to support the private sector to contribute to Abu
Dhabi’s sustainable economic development.
The IPO fund will work closely with local banks to leverage their expertise
through the listing process and will aim to add additional capital from private
co-investors to enhance the proposition for listing companies. The fund and
private co-investors will hold the shares post-IPO for a reasonable period of
time, said the statement.
Mohamed Ali Al Shorafa, chairman of ADDED and ADX, said the Abu Dhabi IPO Fund
would incentivise more private companies, including SMEs, to list, by providing
liquidity and by building additional confidence around IPOs through the
encouragement of additional private sector investment.
“The fund will also promote a shift from relying on debt financing to fostering
greater use of equity instruments. By deepening financial markets and promoting
an investment culture across the UAE’s economy, the launch of the Abu Dhabi IPO
Fund will further strengthen ADX’s position as a leading stock exchange,” Al
Shorafa said.