On the 27th October 2020, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum – Crown Prince of Dubai, announced the launch of a new stock market, dedicated to supporting small and mid-sized companies under the umbrella of Nasdaq Dubai. The Nasdaq Dubai Growth Market (NDGM) was released in conjunction with the Dubai Future District project with the primary aim to enable fast-growing companies a ‘cost-effective’ listing and achieve the next phase of their expansion by raising capital through an initial public offering (IPO). The NDGM is set to commence early 2021, with Nasdaq Dubai working in partnership with government bodies, free zones and expert advisory companies to support the launch.
The new Growth Market is set to host not only companies from the UAE but also those from outside who are looking to expand within the region and internationally. In regards to Dubai’s efforts to help support SMEs in achieving international growth through the NDGM, HH Sheikh Hamdan underlined his belief in the value of supporting SMEs, stating “Dubai seeks to open new opportunities for entrepreneurs, to help them expand, attract investors and finance their projects. SMEs are a key engine of our national economy. 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.”
UN statistics showing that SMEs generate 7 out of 10 jobs in emerging markets fuelled the development of the NDGM, and the categorical differences it bears from NASDAQ Dubai’s main market requirements, such as;
- No minimum capitalisation or number of shareholders
- Compliance advisor – an SME does not need to appoint an investment bank as its sponsor for the IPO, and instead may appoint a Compliance Advisor, which can be an individual that falls under the categories of corporate advisory firms, accountants, lawyers or individuals with sufficient experience of IPOs or financial markets to satisfy the DFSA’s requirements.
- Shorter financial track record is accepted – the Growth Market listing requirements only prescribe a one-year track record instead of a requirement to provide three-years financial trading records for entry to the Main Market.
- Lock-in for existing shareholders – unlike the Main Market where no lock-in provisions are required, the DFSA requires all existing shareholders of the SME at the time of listing to be locked in for at least a one-year period. This aims to instil confidence and protect new investors by keeping key employees and the management team invested in the SME
- Buy-back restriction – a restriction has been introduced to prohibit an SME from repurchasing its own shares within the first two years of listing on the Growth Market. The intention is that this will ensure capital is protected to grow the SME and align the interests of both existing and new investors.
- Reduced costs – listing fees of $15,000 and ongoing annual fees of $20,000 payable to Nasdaq Dubai and DFSA.
With this new stock market, Dubai is looking to foster entrepreneurship and contribute to the success of young businesses. The primary target market for the NDGM is currently SME’s who value under $250m and vitally need the support to effectively grow their business within the region. Companies who are not quite ready for the initial public offering will also still be able to join the NDGM under a ‘Private Market’ segment. Here a company’s shares will be held for safekeeping in Nasdaq Dubai’s Central Securities Depository (CSD).
The initiative acts as a milestone achievement for capital markets of Dubai and surrounding MENAP regions, set to play a key role in the future of capital-raising and the channelling of investment. The NDGM has been strategically designed to attract a wide range of companies across a broad spectrum of both industries and geographies, allowing them a seamless journey to public listing through a very straightforward process. Hamed Ali, Chief Executive of Nasdaq Dubai and Deputy Chief Executive of Dubai Financial Market, stated: “By creating attractive opportunities for investors on a platform regulated to international standards, the market will give companies first-class access to the capital that they deserve and fuel regional and global growth.”
For business queries, in relation to the NASDAQ Dubai Growth Market, and its effect on your business, or in regards to general business operations within the MENAP region, get in contact with our Dubai offices today either by; filling out a contact form below, emailing email@example.com or calling the office directly on +971 4705 0383, where a member of our team will be delighted to assist you.