20/07/2014 01:10 AST

The United Arab Emirates’ Ministry of Economy has published new rules allowing firms in the Gulf Arab state to use existing shares when listing on local exchanges or raising fresh equity capital, a move likely to boost private equity in the country.

Laws governing initial public offerings in the Gulf Arab state have long been criticised for their restrictive nature, including the need to list a minimum of 55% of a company and for only allowing the sale of new shares when going public.

This has led many firms to seek listings outside the country in recent years to the chagrin of local authorities, such as oil services group Gulf Marine Services and healthcare providers Al Noor Hospitals and NMC Healthcare.

Under a July 1 ministerial resolution on firms converting to public joint stock companies, founders of a company can list shares through a sell down of a certain percentage of their existing stock.

The document didn’t specify a minimum percentage any seller could offload, while the law won’t come into force until one day after it is published in the official gazette.

Private equity groups are expected to be among the main beneficiaries of the new law, as they can now use the capital markets to exit existing investments — like in most mature jurisdictions — instead of relying on trade sales to other investors to offload holdings.

“Giving the companies in the UAE the option to either raise additional capital or sell existing shares or doing both will go a long way in encouraging private equity firms to contemplate exits on the local stock markets,” said Karim Souaid, managing partner at Growthgate Capital, a Gulf-focused buyout firm.

“Private equity will become more mainstream when founders don’t need to cede management control upon listing and are not required to raise 55% of the capital,” he added. Changes to laws governing IPOs in the UAE have been in the works for a number of years but authorities have been slow to formalise amendments.

The provision on sell downs was one expected to be included within the country’s long-awaited companies law that covers the operations of firms.

The UAE’s economy minister in March said the country’s president is expected to soon approve it. Also included is a provision reducing the minimum free float required in IPOs to 30% from the current 55% on UAE exchanges.


Gulf Times

Ticker Price Volume
DANAH 46.60 48,475
SARCO 42.30 227,758
HERFY 44.80 10,015

ADX 4,830.22 29.32 (0.61%)

Market
Dividend Yield (%)
P/E
Price/BookValue
Performance
  • 1-Month
  • 3-Month
  • 1-Year
Volume Change
  • 10D Avg Vs 90D Avg
Index vs...
  • 52-w high
  • 50-day moving avg.
  • 200-Day Moving Avg
Ticker Price Change
ADIB 3.95 0.02 (0.50%)
FAB 13.80 0.10 (0.72%)
ADCB 7.01 0.00 (0.00%)
CBI 0.73 0.00 (0.00%)
UNB 3.77 0.07 (1.89%)

DFM 2,840.89 -6.25 (-0.22%)

Market
Dividend Yield (%)
P/E
Price/BookValue
Performance
  • 1-Month
  • 3-Month
  • 1-Year
Volume Change
  • 10D Avg Vs 90D Avg
Index vs...
  • 52-w high
  • 50-day moving avg.
  • 200-Day Moving Avg
Ticker Price Change
EIB 10.00 0.00 (0.00%)
EMIRATESNBD 9.20 -0.18 (-1.92%)
EMAAR 5.10 -0.02 (-0.40%)
EMAARMALLS 2.05 0.00 (0.00%)
DIB 5.01 0.01 (0.20%)
Oman share index ends lower

14/08/2018

The MSM30 index ended lower on Monday and closed at 4,381.92 points, down by 0.55 per cent. MSM Sharia Index closed at 605.47 points, down by 0.07 per cent. Bank Nizwa was the most active in terms of

Times of Oman

Turkey storm felt in Dubai index through Emirates NBD

14/08/2018

The contagion impact from the crisis in Turkey was being felt in Dubai, along with other emerging markets.

The impact was felt largely through Emirates NBD, which recently entered an agreem

Gulf News

Qatar shares tumble as Turkey’s currency crisis alarms investors

13/08/2018

Qatar stocks led losses across the Gulf on Sunday as the Turkish currency crisis unsettled investors. Every regional index ended the day in negative territory. The Doha measure declined by 2.6 perce

Arab News

Oman share index ends lower

13/08/2018

The MSM30 index ended lower on Sunday and closed at 4,406.35 points, down by 0.56 per cent. MSM Sharia Index closed at 605.87 points, down by 0.31 per cent. Al Anwar Holding was the most active in te

Times of Oman

Dubai index sees sharpest fall in 1 month

13/08/2018

The Dubai index fell more than 1 per cent on Sunday, its sharpest fall since July 2, as shares like Emirates NBD and DAMAC Properties weighed on sentiment.

The Dubai Financial Market Genera

Gulf News