Abu Dhabi’s Dh5b fund to support share sales

Under the directives of the Supreme Council for Financial and Economic Affairs, Shaikh Khaled Bin Mohammad 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 to act as a catalyst to strengthen Abu Dhabi Securities Exchange (ADX)’s position as a leading stock market.

The Dh5 billion 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, 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 by promoting equity research.

Shaikh Khaled emphasised the fund’s 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 Abu Dhabi’s sustainable development.

Adding capital

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.

Mohammad 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. The launch of the Abu Dhabi IPO Fund will further strengthen ADX’s position.”