Dubai: The Financial Services Regulatory Authority at Abu Dhabi Global Market (ADGM) has updated its regulatory framework to enable a greater degree of participation by investors and private enterprises seeking funding. The move aims to “support the continued development of private capital markets”.
Access to investments in private markets was, until now, limited to professional investors, which was compounded by the “absence of an organised market for such investments which resulted in illiquidity”. But, with easy availability of digital assets and tokenised securities, private capital markets have become accessible to investors seeking smaller funding. Plus, private enterprises will have more efficient access to raising capital, while “permitting such investments to be traded and - therefore - become more liquid”.
The private capital markets framework (PCM framework) promotes broader participation in this area, thereby leading to greater liquidity, through technology platforms. It allows private enterprises to raise capital from professional clients alongside a limited number of non-professional clients, the latter group being required to have relevant investment knowledge and experience, without the need to ‘go public’ and issue a prospectus.
It also allows securities issued through the framework to trade on technology platforms among professional clients and qualifying non-professional clients.
Notably, the PCM framework is available to serve larger private start-up companies seeking to significantly scale up and expand their operations but do not yet wish to tap the public equity capital markets through an IPO.
According to Emmanuel Givanakis, CEO of FSRA, “The private capital markets framework… will help support and bolster the growth of enterprises, while providing greater investor choices, and ultimately contributing to the growth and diversification of the economy of Abu Dhabi, the UAE, and the broader region. It complements our existing regulatory regime for private financing platform operators that enables early stage start-ups to seek funding from angel and venture capital investors. Collectively, our regulatory framework caters to the funding needs of a wide range of companies at different stages of their growth cycle.”
