x Abu Dhabi, UAEMonday 22 January 2018

SME equity market gains approval

A small business bourse for Dubai is taking big strides forward, executives say.

An equity market for small companies has been approved by the "highest authorities" in Dubai, the chief executive of the government agency Dubai SME says.

Abdul Baset al Janahi said Dubai SME and the Department for Economic Development (DED) were working hard to implement a small-business bourse to create a "huge opportunity" for investors.

"The DIFC [Dubai International Financial Centre], the DFM [Dubai Financial Market], all of us are on the same table," Mr al Janahi said on the sidelines of Franchise UAE, a conference in Dubai to promote franchising in the Emirates.

"We are looking at the opportunities. The idea has been accepted by the highest authorities."

A timetable for introducing the secondary market, in which shares of small to medium-sized enterprises (SMEs) would be freely traded, has yet to be finalised, Mr al Janahi said.

"There are companies as big as Emaar that people have an interest in but I would have an interest in smaller companies because the growth rate is much higher," he said. "Today I cannot invest in them. There's not a market I can go to."

The SME bourse will provide access to funding for businesses with a market capitalisation that is too small to list on the UAE's major bourses.

Lending to SMEs declined significantly during the economic downturn but the picture is improving as many banks initiate schemes to help boost the sector.

To create an environment of transparency for investors, Dubai SME, which is part of the DED, launched applications last month for the Top 100 SME Index, a ranking of Dubai's top small companies. The final list will be announced in October after an evaluation of factors such as growth, the health of balance sheets and strictness of corporate governance.

National Bank of Abu Dhabi last week signed an agreement with Dubai SME to promote entrepreneurship and expand the bank's services to the sector.

Meanwhile, Standard Chartered announced this week that any new SME customer would be served by a team of specialists offering funding, cash management, trade finance, foreign exchange and risk-management products.

Subroto Som, the global head of SME banking at Standard Chartered, estimated the sector would grow by between 10 and 12 per cent a year in the Middle East and Asia.