Abu Dhabi's Supreme Council For Financial And Economic Affairs Launches AED5 Billion IPO Fund To Boost Abu Dhabi Securities Exchange

Abu Dhabi's Supreme Council for Financial and Economic Affairs, an entity set up by the UAE government to supervise matters related to the capital's financial, investment, economic, petroleum and natural resources issues, has launched an AED5 billion IPO Fund in an effort to catapult the Abu Dhabi Securities Exchange (ADX) into becoming one of the world's leading stock markets, according to a tweet posted by the Emirate's media office.

The IPO fund, which will be managed by managed by the Abu Dhabi Department of Economic Development (ADDED), will be investing in five to ten private companies in a given year, with a keen focus on targeting small and medium enterprises (SMEs), and will have a target tick size of between 10% and 40% of the float. This launch comes in the midst of the Abu Dhabi government's initiatives to attract more investors into its business ecosystem in the near future.

Under the directives of the Supreme Council for Financial and Economic Affairs (SCFEA), Khaled bin Mohamed bin Zayed has launched the Abu Dhabi IPO Fund. The AED5bn fund will act as a catalyst to strengthen ADX's position as a leading stock market. pic.twitter.com/htnyuwV9tI

— مكتب أبوظبي الإعلامي (@admediaoffice) October 12, 2021

"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," said H.E. Mohamed Ali Al Shorafa, Chairman of ADDED and ADX. "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."

According to a report by Zawya/Reuters, the Abu Dhabi stock index (.ADI) has been up 54% per year till date, in a performance that has been boosted by higher oil prices as well as through incentives to increase trading. In 2021 alone, the stock index has seen a surge in listings, with companies that fall under state-owned oil company Abu Dhabi National Oil Co (ADNOC) as well as Emirati state-owned holding company Mubadala Investment Company PJSC being listed on the index. The report also mentioned that oil and gas drilling company ADNOC Drilling was listed on Abu Dhabi stock index in September this year while ADNOC's fertiliser joint venture Fertiglobe will be listed in the weeks to come. Abu Dhabi-based holding company International Holding Co. recently announced that it will be listing six of its companies on the stock exchange as well.

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