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Dubai rolls out platform for initial 'private' offerings

Through this platform, companies can access capital through diverse assets including equity and debt with plans to introduce additional asset classes

Dubai Financial Market (DFM) on Wednesday rolled out an innovative platform for initial private offerings to provide an alternative to initial public offerings for family businesses, growth companies, and private companies.

The novel initiative 'Arena' offers issuers equity and debt capital raising options with plans to expand asset classes in the future.

Arena was unveiled at the Capital Market Summit 2024, signifying DFM's expansion into the private market while consolidating its position as a leading financial market in the region.

“Designed to catalyse growth opportunities for both companies and investors, Arena represents a pioneering approach to capital raising and investment within the Mena region.

The initiative provides a platform for a wide range of private companies, including family conglomerates, small and medium enterprises, and businesses at various growth stages,” a DFM statement said.

Hamed Ali, DFM's CEO, said the launch of Arena marks a pivotal moment in DFM's commitment to providing issuers with a transparent and streamlined avenue for capital raising.

“The platform combines the advantages and efficiency of direct listing with the DFM’s diverse investor base and capabilities. It enables investors to easily access private investments in the UAE's most promising companies and brands, unlocking investment opportunities that were previously inaccessible,” Ali.

Through this platform, companies can access capital through diverse assets including equity and debt with plans to introduce additional asset classes. Venture capital firms can expand their investor base by selling private market shares, thus establishing a previously unavailable liquidity pool, the DFM statement said.

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Privately listed companies on Arena will have the option of limiting investor’s access to institutional investors, employees-only, or family and founding members, offering a unique pre-IPO listing option.

For companies seeking to raise over Dh35 million, the platform offers cost-effective access to an extensive network of investors and fosters a collaborative approach with transparency throughout the process.

“Serving as a regulated alternative to conventional financing routes, Arena empowers private enterprises to access capital markets directly and engage with DFM’s purpose-built book-building process. With streamlined offerings, including memorandum review and timelines, issuers can significantly reduce transaction costs,” the statement said.

Arena ensures reliability and efficiency. For investors, it provides exclusive access to DFM private market investments, including early-stage opportunities for portfolio growth.

The initial private offering platform enables investors to easily access private investments in the UAE's most promising companies and brands, unlocking investment opportunities that were previously inaccessible. It also acts as a catalyst to enhance the funding ecosystem for growth companies, paving the way for a more vibrant and inclusive investment ecosystem, the DFM said.

“The technology-powered platform is designed to facilitate seamless processes, including due diligence, book building, brokered trades, and settlement, fundamentally reshaping the landscape of investment accessibility and efficiency,” said the statement.

Ashok Gopinath, managing director of Jaden Boriss, said the emergence of Arena marks a significant advancement, particularly benefiting small and medium-sized enterprises (SMEs) aiming for expansion.

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"As it offers various cost-effective fundraising methods, providing a lifeline for entrepreneurs lacking access to private equity, venture capital, or conventional investors. This accessibility extends to those who struggle to secure funds through traditional channels. The growth of Arena will foster job creation which would lead to growth in GDP. Furthermore, this would enable companies to have it listed which will have the potential to stimulate the capital market," said Gopinath.

Equity market analysts said similar private initial offering platforms in developed markets help private companies that lack the size to be public companies to raise funds.

They said in developed markets the core difference between private market and public market is in how market participants, both buyers and sellers, access the market to invest and to raise capital. For example, the public equities market — like the FTSE-100 or S&P 500 — companies raise capital by selling stock. This is also known as equity or shares. “As this is a ‘public’ market, anyone can purchase shares in a company which is listed on the market. Companies can only enter the market to raise capital when they have satisfied a range of criteria set by the market regulator.”

By contrast, in the private market, there is no rigid guidance as to what a company needs to provide in order to acquire finance or what information it must then disclose publicly on an ongoing basis, they pointed out.