Planned Dh100m fund may go public

The Khalifa Fund aims to launch a Dh100 million ($US27.22m) venture capital operation that may eventually sell shares and let outside investors participate in the growth of Emirati-owned businesses, says its deputy chief executive. The new venture capital fund will take equity stakes in small and medium-sized businesses (SMEs) and serve as an incubator for their development, said Ibrahim al Mansoori.

The Khalifa Fund could stay in control of the new operation but it is considering eventually selling shares to the public to raise more capital. "We are open for all types of exit options that could be exercised, including [an initial public offering]," said Mr al Mansoori. No date was specified for launching the SME initiative. The Khalifa Fund was launched three years ago to encourage Emirati entrepreneurship. At the moment it focuses solely on Abu Dhabi.

"This does not mean that at a later stage ? we will only be focusing on Abu Dhabi. There is potential to expand to the rest of the UAE," Mr al Mansoori said. Analysts said the new incubator would address a significant need in the region. "Anything driven to support the SME sector in the Arab world is a good thing. We know there's a significant gap for SME support," said Emile Cubeisy a managing director at IV Holdings based in Amman, Jordan.

"Listing the fund would mean that Emiratis will have direct exposure to the funds and invest in Emirati entrepreneurship and their own country." Mr Cubeisy said investors who bought shares would need to be aware that such projects often took years to reach maturity. Earlier this year, Ahmed al Mutawa, the head of the Khalifa Fund, said the organisation had received more than 4,000 applications for entrepreneurial projects since its inception, and had awarded Dh346m in loans to young entrepreneurs.