Dubai to launch Nasdaq market for growth companies

The Nasdaq Dubai Growth Market will allow listings for companies with a market value of up to $250m

The Financial Markets Tribunal upheld decisions taken by the Dubai Financial Services Authority in September last year to issue fines against two companies and ban three individuals who were running funds from within the DIFC without authorisation. Courtesy: DIFC AuthorityShow less

Dubai is launching Nasdaq Dubai Growth Market, a new financial exchange that will help small, fast-growing companies to access capital markets.

The market, which will be operated by Nasdaq Dubai, will allow small and medium-sized companies the ability to sell shares through initial public offerings and is being established as part of the Dubai Future District initiative, announced in January.

“SMEs are a key engine of our national economy," Dubai's Crown Prince Sheikh Hamdan Bin Mohammed said in a statement announcing the new market.

"The launch of the Nasdaq Dubai Growth Market is a strategic step that will support this vital sector by opening new horizons for its companies and providing them with investment resources to expand their business and enhance their attractiveness in global markets."

The Growth Market will not only look to attract companies from the UAE looking to raise capital, but also provide listings to fast-growing companies around the world, according to the statement.

The market will allow listings for SMEs with a value of below $250 million. Companies only need to have operated for one year, compared to three for Nasdaq Dubai's main market, and can sell a minimum of 25 per cent of their equity, allowing founders to retain control.

The Growth Market is expected to launch early next year, in line with its first IPO, according to the statement.

A number of companies have already appointed advisors ahead of potential listings and a regulatory framework supporting the new exchange is already underway. Firms that are not ready for a listing will be able to join a private market segment of the growth market, where their shares are held for safekeeping in Nasdaq Dubai’s Central Securities Deposit.

Junior markets with light-touch regulations are a feature of many stock markets around the world. The London Stock Exchange has an Alternative Investment Market and in Europe SMEs can list on the Euronext exchange. In 2017, Saudi Arabia launched the Saudi Parallel Market, known as Nomu, which has lighter listing requirements than the Saudi Stock Exchange (Tadawul).

On Tuesday Burgerizzr, a restaurant chain in Saudi Arabia that operates 76 branches across the kingdom, appointed the affiliate in the country of Emirates NBD as financial advisor for its upcoming IPO on Nomu.

Many companies currently listed in Dubai operate in traditional sectors like banking and real estate, so a growth market of technology firms or fast-growing businesses will provide a different offering to investors, Ali El Adou, head of asset management at Daman Investments, told The National.

"The stock market is a mechanism of funding and small companies that have unique ideas now have a gateway to list and get funded by public investors," Mr El Adou said.

Using public markets to attract capital may mean that SMEs have to comply with certain requirements, but it also offers investors greater oversight, which reassures them, he added.

"When you have private equity, there is less transparency, but on the public side there is more transparency and people will have more confidence to invest," he added.