The economy in Dubai and the UAE has experienced an impressive recovery following COVID-19, as the leadership’s vision, resilience, and stimulus packages have driven business growth by 4.4% year-over-year in 44 free zones.
As of mid-February 2021, around 60,600 companies were registered in the UAE’s free zones, according to official figures released by the National Economic Register (NER). Business continuity plans adopted by the UAE to attract more foreign business and investment have contributed to this growth. However, the future looks even brighter for free zone companies, which account for around 10% of the total number of UAE companies; 60% of the free zone companies are located in Dubai free zones, including 8,700 in Jafza alone.
With the Dubai capital market’s new regulatory framework in place, we are approaching the dawn of a new beginning where free zone companies can now benefit from numerous advantages of an Initial Public Offering (IPO) and listing for the first time.
The Dubai Financial Market (DFM) and Nasdaq Dubai, at the center of Dubai’s capital market, have developed a favourable business environment to provide free zone companies with IPOs and listing opportunities on DFM’s Main Market and Nasdaq Dubai’s Growth Market. SME’s and larger free zone companies will be able to raise funds to propel growth, raise their profile, benefit from the credibility a listing provides, and connect with a large, diversified investor base from 207 different countries thanks to the streamlined market accessibility. As a result of this opportunity, business owners are also able to create a fair value for their business, as well as an exit strategy for shareholders.
Opportunities for growth
In addition to providing free zone companies with trading systems and technologies that will enable them to grow once listed, the upcoming listing opportunities build on solid foundations and are determined to meet market needs. DFM and Nasdaq Dubai have urged regulatory changes that will assist free zone companies with a public offering and listing. Moreover, both exchanges have formed highly experienced and dedicated teams to assist free zone companies in identifying the most efficient way to access the public market.
By offering free zone companies access to DFM’s new free zone access rules, free zone companies can now raise capital from institutional and retail investors, something that was previously only available to mainland companies, joining the other companies on DFM that have already raised over AED 77 billion through public capital markets. Companies valued below USD 250 million can use Nasdaq Dubai’s Growth Market to raise capital through an IPO as a viable, efficient option, with the added benefit of allowing young, newly-established companies to list.
Dubai’s regulatory enhancements on both exchanges are prime examples of the full ecosystem it provides businesses so they can grow both locally and globally.
Business transformation through diversified conglomerates
The capital markets in Dubai are now open to various types of businesses, whether international or local, from SMEs to large conglomerates, to transform how businesses, both local and international, can increase their capital, finance their growth strategies, and attract new investors through world-class infrastructure and regulations that facilitate flexible IPOs and listing options.
In addition to this, investors have access to lucrative investment opportunities in rapidly growing free zone-based companies operating across a wide array of economic sectors and within a regulated, safe and secure environment.
Taking into account public disclosures due to pandemics, listing free zone companies will be another trend. Dubai Capital Markets have become one of the hottest topics for free zone companies in the UAE, regardless of where they are or what their industry is.