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Jafza companies are poised for further growth following regulatory changes

By Tahir Mahmood Published on 05-Apr-2017

Ever since it opened in 1985 as Dubai’s first free zone, Jafza (Jebel Ali Free Zone) and the businesses based there have been at the forefront of the emirate’s astonishing growth. New regulations announced by Jafza last month show that the free zone is continuing to blaze a trail to create an ever more attractive environment for companies from around the world to operate.

These regulations enable overseas companies to operate there without any need to establish a new legal entity, which will encourage even more international businesses to set up a base in the free zone. The new guidelines also allow FZE or FZCO status companies to convert to PLC status, and then list on a stock exchange.

Which all sounds rather dry and technical, but it has immense significance. For the first time, Jafza companies now have a streamlined route to carry out an IPO to raise capital for growth. This has the potential to transform the prospects of many of them, as even well run and successful businesses often struggle to find sources of new funds. Among the more than 7,000 businesses based there, employing more than 135,000 people, many are likely to be in a position to benefit in the near or medium term.

A number of Jafza companies have already expressed interested in a possible listing on Nasdaq Dubai. In many ways, the exchange mirrors the free zone’s own advantages: it is efficiently run, open to the world, and a key part of the infrastructure set up by the Dubai government to promote the emirate’s growth as well as its links with the rest of the world. Moreover Nasdaq Dubai, the region’s international stock exchange, is located just 30 kilometers away from Jafza along Sheikh Zayed Road, Dubai’s main thoroughfare.

Through us, Jafza companies can gain access not just to regional investors, both institutional and individual, but also to international funds based in Boston, London, Singapore, or wherever. While 23% of investment in Nasdaq Dubai listed companies comes from the MENA region, 29% comes from North America, 16% from Europe and more than 4% Asia Pacific.

As well as an injection of capital, a Nasdaq Dubai IPO brings visibility and recognition around the world. On listing day the exchange arranges a market opening bell-ringing ceremony, which is usually televised, and the occasion is marked by a welcome message on the Nasdaq Tower in Times Square, New York. After listing, the exchange provides further support for issuers by sending them updates on trading and liquidity of their shares, helping to arrange roadshows, liaising with the issuer’s investor relations team on how to communicate with investors.

Nasdaq Dubai is suitable for companies of various sizes. DP World, the owner of Jafza, is listed on us with a market cap of billions of US dollars, but we can host much smaller companies too, with a market cap of as little as 10 million dollars. No more than 25% of the shares need to be listed, allowing owners to keep control of the business.

Dozens of Jafza-based companies have signed up to attend a seminar this month that will explain the advantages of carrying out an IPO on Nasdaq Dubai, and what the processes are for going about it. Emirates NBD Capital and Al Tamimi law firm will participate to lend their expertise to the event.

We look forward to welcoming many Jafza companies at this event and future ones, and staying in touch with them regarding their capital raising plans. While some may be interested in raising money soon, for others the right timing may be years away. We are here to support them in the meantime in every way we can, so that when they are ready, their IPO will be smooth and successful.

About the author

Tahir Mahmood
Head of Business Development, Nasdaq Dubai
Tahir Mahmood

Tahir Mahmood heads the Business Development department of Nasdaq Dubai, overseeing all products including equities, equity futures, Sukuk, bonds and Murabaha. He works with the team to bring new listings to the exchange, as well as offer new products to the market. He has had a key role in making Dubai the leading Sukuk listing venue globally.

Tahir joined Nasdaq Dubai in July 2013 and has spent most of his career working within the Islamic finance arena in London, Bahrain, Qatar and now Dubai. He has assisted commodity brokerage houses to establish operations in both London and Bahrain, specializing in Sharia’a-compliant commodity based financial products.

Tahir holds a B.Sc in Business Computing from City University, London.

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