Abu Dhabi launches IPO fund to support SMEs

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.