Jebel Ali Free Zone Authority (Jafza) has opened the door for its 7,300 registered companies to add to the IPO momentum that is building in the emirates.
Jafza said yesterday it has created a new business framework enabling companies in the free zone to apply directly to the regulator to list shares on the Nasdaq Dubai exchange.
Optimism is high for new offerings and the outlook for equities is bullish. Dubai and Abu Dhabi indexes posted gains of 32 per cent and 14 per cent respectively in the first quarter of this year, carrying through last year’s momentum.
“Businesses are always in search of capital, and the equity market serves as an important source,” said Salma Ali Saif bin Hareb, the chief executive of Economic Zones World, the parent company of Jafza. “Jafza is an eco-system that nurtures its members, providing them with all the ingredients for success, to reduce cost and maximise revenue by giving efficient access to markets, suppliers and capital.”
Several local companies have suggested IPOs to raise funds after years of dormancy in local capital markets. The property investment firm Emirates REIT has spent the past two weeks on a roadshow drumming up interest for its upcoming public offering on Nasdaq Dubai. Emaar Retail has announced a plan to to raise up to US$2.4 billion by listing some 25 per cent of its shopping malls and retail business, which could also be on the exchange.
“As the region’s international exchange, Nasdaq Dubai can offer Jafza companies a high public profile globally as well as a platform for capital-raising,” said Hamed Ali, the chief executive of Nasdaq Dubai.
“The exchange welcomes listings of regional arms of international companies, as well as regionally owned businesses, and we look forward to working with Jafza companies to explore listing opportunities.”
Last month, Sultan Al Mansouri, the Minister of Economy, said that a new companies law would be approved soon. One mooted measure in the new law would lower the minimum flotation requirement on the country’s main exchanges from 55 per cent – which forces owners to sell controlling stakes as part of the listing process – to a more palatable 30 per cent.
Nasdaq Dubai rules already allow as little as 25 per cent of a company to be listed and a minimum market capitalisation of only $10 million – both factors which could appeal to smaller businesses.
Jafza’s initiative could also help Nasdaq Dubai to increase liquidity and trading activity on the exchange.
Up to $1bn is forecast to flow into UAE stock markets from foreign index trackers alone as a result of the upgrade to emerging market status by MSCI next month.
ascott@thenational.ae
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