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, has launched the Abu Dhabi IPO Fund.
The fund aims to act as a catalyst to strengthen Abu Dhabi Securities Exchange (ADX)’s position, Abu Dhabi Government Media Office reported.
Under the directives of the Supreme Council for Financial and Economic Affairs, Khaled bin Mohamed bin Zayed has launched the AED5 billion Abu Dhabi IPO Fund to incentivise and support private sector companies to list on ADX. pic.twitter.com/dtZmZw46zQ
— مكتب أبوظبي الإعلامي (@admediaoffice) October 12, 2021
The Dhs5bn fund, will be 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 SMEs, and with a target ticket size of between 10 and 40 per cent of the float.
The fund will help private companies grow and support them through the IPO process by providing liquidity and promoting equity research, a statement said.
The 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 listing companies.
The fund and private co-investors will hold the shares post-IPO for a reasonable period of time, the statement added.
Mohamed Ali Al Shorafa, chairman of ADDED and ADX, said: “The Abu Dhabi IPO Fund will incentivise 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.”
The Abu Dhabi Securities Exchange General Index (ADI) reached 7,700 points for the first time this year, supported by a series of listings and participation by investors.
ADNOC Drilling Company was listed on the ADX this month, while ADQ also intends to proceed with listing shares of the Abu Dhabi Ports Company.
Last month, ADX also said that it would cut in half its trading commission and extend trading hours in an attempt to boost liquidity in the market.
Trading fees will be reduced to 0.025 per cent from 0.05 per cent starting from September 1.