ADGM Updated To Benefit Private Investors

Abu Dhabi Global Market is a centre of lucrative opportunities. Since its inception in 2015, this award-winning authority has been managing the flow of investors in the country. As the government seeks to boost its private sector, this regulatory authority has updated its framework to benefit private investors. This major update aims to support the continued development of private capital markets across the country.

What’s the new update all about?

Until now, only professional investors had access to investment in private markets. Since an organised market for such investments was absent, this limited access resulted in liquidity. Thankfully, with the new update from Abu Dhabi Global Market (ADGM), the private capital markets have been made more accessible through the easy availability of digital assets and tokenized security. All of these new changes have been introduced as the private capital markets framework ( PCM Framework ). This PCM framework promotes broader participation in this area, leading to a greater liquidity through digital platforms in two ways:

• It allows private enterprises to raise capital from professional clients alongside qualified non-professional clients (to a certain limit). However, the latter group should have relevant investment knowledge and experience so that there is no longer the need to ‘go public’ and issue a prospectus.
• The new PCM Framework also allows securities issued through the framework to trade on technology platforms among professional clients ( applies to qualifying non-professional clients too).

The major notable features of the PCM Framework are better security and ease for the larger private start-up companies. The framework is best in helping them scale up and expand their operations that do not yet wish to tap the public equity capital markets through an initial public offering (IPO). This would easily allow the private investors to make better and more relaxed choices and contribute to the growth and diversification of the economy of the whole UAE.

How do private market investors benefit the economy?

• Creating livelihoods

As the country prepares for the Expo 2020, the new PCM Framework acts as a gateway for new opportunities for foreign investors. The revised PCM framework broadens the scope of private market investment, increasing livelihoods in the country. Both locals and expats who wish to work and settle in the UAE can benefit due to flourishing private businesses and job opportunities.

• Driving investments

UAE is ranked #1 in the West Asia region in terms of Foreign Direct Investment (FDI). It accounts for 54.4 per cent of the total FDI inflow to the region. The introduction of the new PCM Framework aims to maintain this record by driving private investments. One can say that ADGM has smartly developed the PCM Framework to complement the government’s strategies to boost the country’s economy.

• Use of technology

With an emphasis on the latest technology, UAE is at the cusp of a technology revolution that could transform manufacturing and industrial production in the country.  Since the private sector can harness and use technology to unleash greater prosperity for the nation, it would contribute significantly to the country’s economy. The new PCM Framework focuses on tokenised security and useful digital platforms since private sectors are generally equipped with the potential.

• Fostering entrepreneurship and innovation

In the next ten years, the UAE government aims to become home to 20 startups worth more than $1 billion each. The PCM Framework helps the government achieve this milestone by giving private investors a fair chance to initiate more and more startups and innovations. Collectively, this PCM framework is set to complement the existing regulatory regime for private financing platform operators. If you seek new business opportunities or startups in the UAE, FlyingColouris here to the rescue. We have 17+ years of expertise in helping private investors in company setup and registration in the UAE. UAE is the future of private investors, so contact us today if you are looking forward to starting a new company.