Abu Dhabi’s Supreme Council for Financial and Economic Affairs on Tuesday launched a $1.4 billion (Dh. 5 billion) IPO fund to strengthen Abu Dhabi Securities Exchange (ADX) as a leading stock market, according to the emirate’s media office.
The Abu Dhabi IPO Fund will act as a catalyst to strengthen Abu Dhabi Securities Exchange (ADX)’s position as a leading stock market.
Launching the fund, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Chairman of the Abu Dhabi Executive Office, emphasized its 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 emirate’s sustainable economic development.
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 invest in five to 10 private companies per year, with a focus on SMEs.
It will have a target ticket size of between 10 and 40 per cent of the float, the media office added.
The fund will help private companies grow and support them through the IPO process by providing liquidity and by promoting equity research.
The Abu Dhabi 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.
Commenting on the launch, Mohamed Ali Al Shorafa, Chairman of ADDED and ADX, said: “The Abu Dhabi IPO Fund will incentivize more private companies, including SMEs, to list, by providing liquidity and by building additional confidence around IPOs through encouragement of additional private sector investment.”
“It will also 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,” he added.