Dubai: Abu Dhabi has launched a Dh5 billion IPO Fund to serve as ‘catalyst’ for further growth of the Abu Dhabi Securities Exchange, currently with a market cap in excess of Dh1 trillion.
The new fund will be directly overseen by the Supreme Council for Financial and Economic Affairs and managed by the Abu Dhabi Department of Economic Development (ADDED). It will invest in five to 10 private companies per year, with a focus on small and medium businesses too.
The Fund was launched by Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, member of Abu Dhabi Executive Council, Chairman of Abu Dhabi Executive Office, and member of the board of Abu Dhabi Supreme Council for Financial and Economic Affairs.
A steady IPO flow
The Abu Dhabi IPO Fund will work with local banks to help with the listing process. It 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.
In the year to date, Abu Dhabi has seen a steady flow of IPOs, each of which received sizeable investor and institutional interest. There was ADNOC Drilling, which garnered heavy oversubscriptions – to the tune of $34 billion – as well as real estate and construction focussed Alpha Dhabi and the satellite communications company Yahsat.
“The Abu Dhabi IPO Fund will incentivise more private companies to list, by providing liquidity and by building additional confidence around IPOs through encouragement of additional private sector investment," said Mohamed Ali Al Shorafa, Chairman of ADDED and ADX. "It will promote a shift from relying on debt financing to fostering a 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.”
It will promote a shift from relying on debt financing to fostering a greater use of equity instruments