Qatar economy: Quick View – Small and medium-sized enterprises to trade on bourse

Event

Qatar Exchange (QE) has teamed up with Enterprise Qatar (EQ), a state entity, to help small and medium sized enterprises (SMEs) to list on the country’s junior bourse, the QE Venture Market.

Analysis

The junior bourse was created in 2012 to provide SMEs – which often complain of a lack of access to credit because of banks’ reluctance to lend to them on favourable terms – with an alternative source of raising capital. So far, however, no SME has listed on the bourse. One of the main reasons for this has been the failure of the SMEs to find a liquidity provider, usually a broker – a condition that the market regulator, the Qatar Financial Market Authority (QFMA), has made mandatory because of the greater risk profile of SMEs. Other conditions for the listing of SMEs include a track record of at least one year, a minimum authorised capital of QR5m (US$1.37m) – 50% paid up – and a minimum of 20 shareholders and a free float of 10%.

Under a Memorandum of Understanding signed between the QE and the EQ, the EQ will assist SMEs committing to list on the junior bourse through a subsidy programme to meet the QFMA’s listing criteria and cover some of the costs incurred in becoming a publicly listed company. The EQ was established by the government in 2006 as a focal point to develop SMEs and promote entrepreneurial innovation in the private sector as part of the state’s economic diversification programme. It works closely with Qatar Development Bank and other commercial lenders to provide funds, but has had only limited success in persuading SMEs to list on the QE Venture Market.

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