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Shaping the future of free zone companies’ transformation into IPO

Shaping the future of free zone companies’ transformation into IPO

Free zone companies will be able to generate a wave of potential new investors to enable them to expand their business and enhance their attractiveness in global markets

As Dubai and the UAE are driving post-COVID-19 economic recovery, led by the leadership’s vision, high level of resilience and numerous stimulus packages, statistics show that free zones provide an excellent example of this impressive performance with a 4.4% year-on-year rise in total number of companies operating within 44 free zones.

According to official figures released by UAE’s National Economic Register (NER), around 60,600 companies were registered in the country’s free zones as of mid-February 2021. The growth is reflective of the successful business continuity plans adopted by the UAE to lure more foreign businesses and investments. Yet, the future looks even brighter for free zone companies that account for about 10% of the total number of companies registered in the UAE, out of which 60% of the free zone companies are a part of Dubai free zones including 8,700 companies in Jafza alone.

The dawn of a new beginning is approaching us supported by the Dubai capital mar- kets’ revolutionised regulatory framework enabling free zone companies to leverage the numerous benefits of an Initial Public Offering (IPO) and listing for the first time.

Dubai Financial Market (DFM) and Nasdaq Dubai, at the heart of Dubai’s capital market, have developed a favourable business environment to provide IPO and listing opportunities for free zone companies on DFM’s Main Market as well as Nasdaq Dubai’s Growth Market. The streamlined market accessibility ensures that small and medium-sized companies (SMEs) and larger free zone companies will be able to raise funds to propel growth, raise their profile, benefit from the credibility a listing brings, and connect with a large and diversified investor base from 207 different countries. This opportunity is also providing business owners with a viable and transparent marketplace to create a fair value of their business and an exit opportunity for existing shareholders.

Growing opportunities

Built on solid foundations and determined to meet market needs, the new listing opportunities also create an added value for free zone companies by providing them with the trading systems and technologies that will empower their growth once listed. The DFM and Nasdaq Dubai have advocated widespread regulatory enhancements that will assist free zone companies with a public offering and listing. Both exchanges have specifically formed a dedicated, highly experienced team to help free zone companies identify their most suitable route to access the public market in an efficient manner.

With the new free zone access rules offered by DFM, opening up to free zone companies now allows such companies to raise capital from both institutional and retail investors, something that was previously restricted to companies established in the mainland jurisdiction, joining the other listed companies on DFM that have already raised over AED 77 billion through the public capital markets. Nasdaq Dubai’s Growth Market gives companies valued below USD 250 million the opportunity to use the route of an IPO as a viable and efficient option to raise capital, with the added benefit to younger companies that have only been established for 1 year to list.

These regulatory enhancements on both exchanges are prime examples of how Dubai is providing businesses the full ecosystem for them to establish and grow locally and internationally.

See Also

Diversified conglomerates for business transformation

Henceforth, doors of Dubai capital markets are wide open for various types of free zone companies from SMEs to large and diversified conglomerates to transform the way such businesses, whether local or international, can increase their capital, finance their growth strategies and attract new investors by employing world-class infrastructure and regulations that offer flexible IPO and listing options.

This also strengthens the development and sustainability of investments in free zones, providing investors with lucrative investment opportunities in rapidly growing free zone-based companies that thrive across various economic sectors and within a regulated, safe and secure trading environment.

It is another trend in 2021 that will be raising the importance of listing free zone companies, taking into consideration public disclosures due to pandemic. No matter where you are or what industry you operate in, Dubai Capital Markets has become one of the hottest topics for free zone companies in UAE

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