The Nasdaq Dubai Growth Market for small and mid-sized companies will not only enable fast-growing companies in the region to achieve affordable listings but also create major opportunities for investors looking for access to small businesses in a post-Covid economy.
The new stock market for small and mid-sized companies, launched on the directives of Sheikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai, will be operated by Nasdaq Dubai and host companies from the UAE as well as those from outside looking to expand in the region as part of the Dubai Future District project.
From the point of view of small and medium enterprises, the SME bourse is excellent news as it will provide access to funding for businesses with a market capitalisation that is too small to list on the UAE’s main bourses — in this case 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. Like Nasdaq Dubai, the Growth Market will allow owners to carry out the IPO while selling only 25 per cent of the shares in their company.
With the support of entrepreneurs and investors, the Growth Market is therefore set to play a vital role in capital-raising and the channelling of investments to SMEs in Dubai and beyond
Further, the flexible options provided by the Nasdaq Dubai Growth Market will also enable several SMEs access to the equity market in ways that were never possible earlier. For instance, companies who are not yet ready for an IPO will be able to join the ‘Private Market’ segment, where a company’s shares will be held for safekeeping in Nasdaq Dubai’s Central Securities Depository — providing confidence to investors and preparing the enterprise into an exchange environment ahead of a potential listing. Access to equity markets will also significantly ease the pressure off SMEs to seek more expensive bank loans to grow their businesses.
Higher trajectory of growth
From the perspective of investors, the Growth Market presents a brilliant opportunity to invest in smaller, home-grown enterprises which are not only dynamic and innovative but also typically offer a much higher trajectory of growth than traditional ones. The world over, SMEs today represent around 90 per cent of enterprises and more than 50 per cent of jobs worldwide — and in the UAE they form the backbone of the economy, contributing almost 50 per cent to the GDP.
Similar to alternative options in some of the world’s biggest financial markets — like the Alternative Investment Market in London — the Nasdaq Dubai Growth Market will thus support a critical sector for the UAE economy by providing them with resources to expand their business and boost their global competitiveness. With the support of entrepreneurs and investors, the Growth Market is therefore set to play a vital role in capital-raising and the channelling of investments to SMEs in Dubai and beyond.