.jpg)
Dubai Financial Market launched today the “Guide to going public”, a recreated initiative aimed at supporting the corporate in local market through a step by step guide for private and family businesses planning to go public. The new guide highlights the benefits of taking private companies to the public arena, demonstrating case studies of some listed companies.
The new development coincides with other unique developments as the exchange is currently considering the rights issues listing to be traded, a new tool to diversify investment options available for investors.
The new guide was launched on Thursday , June 11th 2009, in presence of over 60 top notch professionals from investment bankers, auditors and legal consultants. The SCA representation also added a great support to the event.
Essa Kazim, executive chairman, Dubai Financial Market “PJSC” said: “ going public is a major milestone in a private company’s development, bringing in depth diversification in capital markets. DFM’s experience in going public is a clear proof of the importance of such development either through growth and expansion or the adoption of transparency, corporate governance and effective management for the good of investors”.
“DFM is doing its best in supporting companies in their growth and expansion plans which adds to the development of local capital markets and gives it the depth it needs. Undoubtedly, capital markets are the main channel through which private and family businesses can tap in to continue its success story. Offering shares to the public brings in many advantages including securing the needed finance from investors rather than bank finance which means that such companies will be under the burdens of repayment with interest. More importantly, going public is a critical step in preserving family and privately held companies and bringing in more effective management through transparency and corporate governance. All of these aspects are highly significant for the continuation of family businesses through different generations”.
“DFM is considering several initiatives to diversify investment opportunities through new financial tools such as trading of rights issues which means capital increase in shares, that allows shareholders to increase their shareholding under lower prices. Right issues trading will give shareholders the opportunity to preserve their rights, especially those who are not subscribing to the capital increase. Moreover, it will secure liquidity for investors without the need to sell their shares, as they will be entitled to sell their rights to other investors. Shareholder who doesn’t have enough liquidity can partially sell rights and use the proceeds in subscription to new shares” Kazim said.
Fahima Al Bastaki, senior vice president, Market Development Division head, DFM said: “ we took the initiative to launch the guide to going public, as we are aware of the important step for privately held companies transformation into public joint stock companies to continue its growth and expansion. The guide is a step by step manifest that explains the IPO process in details. This achievement came in cooperation with Shuaa Capital and Al Tamimi and company”.
“Private and family businesses are increasingly aware of the importance of going public taking into account the long term risk on the second and third generations with the free market economy and the ignited competition from foreign companies. International studies revealed that 65% of family businesses face the challenge of discontinuity in the second generation. The percentage reaches 90% with the third generation. According to this, DFM is working restlessly to support family and private businesses, and to create the appealing environment to going public. Undoubtedly, the concerned authorities such as ESCA is doing the best in this regard through the development of laws and regulations to lower the minimum requirement to 30%, allow the book building and adopt relevant valuation mechanisms all these factors will activate the IPO market.”” Al Bastaki added.
“Some people think that the implications of the global financial crisis will erode private and family business appetite to go public , which is not true. As a matter of fact, the current circumstances are an opportunity for these companies to prepare themselves for growth, challenges and expansion, supported by an attractive business environment and regulatory framework thanks to the positive steps taken recently such as allowing the book building for share valuation ” Al Bastaki concluded.
Investment bankers, auditors and legal consultants participating in the event welcomed the launch of “guide to going public”, to highlight the positive implications of going public of private companies future. Experts praised DFM’s commitment to take the needed steps to explain the reflections of the process on companies and financial markets through the diversification of investment opportunities and attraction of unrepresented/ low represented economic sectors to the financial markets.
