New stock market for emerging SMEs unveiled in Dubai

By Rahul Vaimal, Associate Editor
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Dubai has launched a new stock market named Nasdaq Dubai Growth Market to raise money through an initial public offering (IPO) for emerging companies and small and medium enterprises (SMEs).

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Dubai Executive Council has launched the new market under Nasdaq Dubai. It enables SMEs to list undertakings valued at less than $250 million (Dh917.5 million) with a minimum operating history of one year as compared to three years for Nasdaq Dubai’s main market.

In line with the first IPOs, the Nasdaq Dubai plans to open the Growth Sector in early 2021. According to the official statement, several companies have already appointed advisors to launch the IPO process.

The Nasdaq Dubai Growth Market will not only list companies from the UAE region but also from around the world in order to help them expand both regionally and globally.

Nasdaq Dubai is collaborating with government agencies, UAE free zones and specialist advisory firms as allies to launch the new stock market. Advisors will include financial consulting companies, investment banks, law firms and accounting firms offering tailor-made assistance, including pre-IPO awareness and preparedness exercises.

The companies who are not ready for an IPO would be able to enter the Growth Market Private Market segment. The shares of a company in the Central Securities Depository (CSD) of Nasdaq Dubai are held in the private sector for safekeeping. This is intended to give investors confidence and move the business ahead of a possible listing in an exchange environment, as per the statement.

Sheikh Hamdan said, “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”.

At the recently held Annual Investment Meeting (AIM) 2020, Dr. Ahmad Belhoul Al Falasi, UAE Minister of State for Entrepreneurship and SMEs said that SMEs are major contributors to the global economy by representing 90 percent of enterprises and over 50 percent of jobs worldwide.

“In the UAE, SMEs are the backbone of the economy, contributing almost 50 percent to the GDP,” he said during the summit.

Anish Mehta, Chairman of the Dubai Chapter of the Institute of Chartered Accountants of India (ICAI) said that SMEs play an important role in any economy and setting up a new stock exchange is a step in the right direction.

Anish Mehta
Anish Mehta
ICAI – Dubai Chapter

“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 financial 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”.

Essa Kazim, Governor of Dubai International Financial Centre and chairman of Dubai Financial Market said, “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”.

“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.