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UAE urges family businesses to trade on local exchanges

UAE encourages more family businesses A top government official said to list shares on the country’s stock exchanges to enable easier succession in companies and provide more liquidity to local exchanges.

“It’s very encouraged, we’ve seen family businesses structure themselves to go partially or fully out of IPO. [initial public offering]Ahmad Al Falasi, Minister of State for Entrepreneurship and SMEs, National On the sidelines of the Best CEO Forum in Dubai on Thursday.

“Once you list that company, the level of data that goes into the processes makes it easier for succession, for legacy alike, because now you’re listed, you’re reporting and auditing, you’re in a shareholder structure. It’s much easier for succession as well,” he said.

Additionally, Mr Al Falasi said listing more family businesses that are “big names” and “big holdings” injected significant liquidity into the UAE’s stock markets.

“Adding that liquidity … goes a long way,” the minister said.

However, some family business owners prefer to stay in control of the business, he said.

“It’s hard to understand that you can still be a family business and be listed … when you list your company that you don’t give away, you’re much better structured.”

Abu Dhabi Stock Exchange, the second largest stock exchange in the Arab world after Saudi Arabia’s Tadawul Stock Exchange, more than doubled its market value last year to a record Dh 1.6 trillion, making it the second largest stock exchange in the Arab world by 2021. making it one of the best performing exchanges globally.

Interest in IPOs in the GCC markets remained strong, despite stifled global public offering activity following Russia’s war in Ukraine that rattled stock and commodities markets. Higher oil prices and a strong economic recovery have boosted investor confidence and bolstered liquidity in the UAE’s capital markets.

Aiming to boost its stock market amid growing appetite for IPOs in the region, Dubai announced its listing plans last year. 10 state-owned companies as part of a doubling strategy capital market To dh3tn and attract foreign investment.

Family businesses make up about 90 percent of private companies in the UAE. UAE Ministry of Economy said it was considering last year New policies to help family businesses grow as they form a vital part of the country’s ongoing transition to a more sustainable economy.

UAE in January family business property management actto further strengthen the contribution of the sector to the economy and to facilitate the transition to successive generations.

Mr. Al Falasi said his focus is currently on the small-medium segment of family businesses and providing them with guidelines on best practices.

“What we’re finding increasingly difficult in the region is that third-generation family owners run the business as a one-man show. We want them to structure the business to use continuity going forward – that doesn’t necessarily happen until it hits multi billion. [stage]”

Ahmad Al Falasi said listing more family businesses that are 'big names' and 'big holdings' has injected significant liquidity into the UAE stock markets.  Chris Whiteoak / National

Mr. Al Falasi said consultations are ongoing with a group of small and medium-sized family businesses to understand their requirements.

Such companies have highlighted the need for guidelines to provide access to affordable legal advice for structuring their businesses, structuring and changing the mindset of speaking about succession between different generations in a family business.

Mr. Al Falasi said policymakers are encouraging more family businesses to go public by making markets more attractive and more liquid, and by regulating regulations to make it easier for these companies to be listed. Nasdaq Dubai Growth MarketA financial exchange launched in 2020 to help small, fast-growing companies access capital markets.

The exchange allows listing of SMEs with a valuation of less than $250 million. Companies only need to operate for one year, compared to three years in Nasdaq Dubai’s main market, and sell at least 25 percent of their equity, allowing the founders to retain control.

Updated: May 19, 2022, 13:20

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