UAE allows co-operatives to trade shares on local stock exchanges

Move will let co-operatives raise new capital and expand portfolios

Dubai plans to list 10 government and state-owned companies on the Dubai Financial Market as part of a broader strategy to double the financial market's size to Dh3 trillion. Pawan Singh / The NationaShow more

The UAE Cabinet on Thursday approved a decision to let co-operative associations trade their shares on the local financial markets.

Listings will allow co-operatives, which are primarily supermarkets and retail businesses, to raise new capital from outside and expand their portfolios, the state-owned news agency Wam reported.

Access to capital markets will also boost the co-operatives' contribution to the national economy, improve their competitiveness and help the industry profit, Wam said.

The development comes as Dubai plans to list 10 government and state-owned companies on the Dubai Financial Market as part of a broader strategy to double the financial market's size to Dh3 trillion ($816.7 billion) in addition to a slew of successful initial public offerings on the Abu Dhabi Securities Exchange (ADX), the second largest market in the Arab world.

In October, Fertiglobe, the world’s largest seaborne exporter of urea and ammonia combined, raised about $795 million from its listing on the ADX. That offering came after that of Adnoc Drilling, which reaped $1.1bn from its listing in the same month. In July, Al Yah Satellite Communications, better known as Yahsat, a unit of Mubadala Investment Company, raised about $730m through its listing.

Dubai also plans to launch two funds with a total value of Dh3bn to boost trading on the stock markets and encourage small- and medium-sized companies to list on its financial markets.

Emirates Central Cooling Systems Corporation, better known as Empower, as well as government-owned utility company Dubai Water and Electricity Authority and Dubai road toll system Salik will be listed on DFM in the coming months.

Tecom, the owner and operator of investment free zones in the emirate, will also be listed as part of the plans revealed by officials last year.

To increase activities of market makers on DFM, last month, Dubai launched a company to help the bourse attract more capital.

The company, called xCube, aims to develop and adopt algorithms and technology to perform market-making activities and high frequency trading on both cash equities and derivatives listed on local markets.

The recent decision to allow co-operatives to list their shares is expected to lead to local financial markets establishing special platforms for the registration, trading and transfer of the stocks of co-operatives.