Unlocking potential Unlocking potential

We take a look at how financial players like ADCB are continuing to support the future growth of SME 100 companies.

It’s been almost a year since Dubai SME unveiled the first batch of SME 100 companies.  The initiative has become the key platform and catalyst in Dubai for identifying promising SMEs with the hope of graduating some of them to become large globally-oriented companies. Furthermore, the list has opened up new doors for the SME community at large, by providing them with a benchmark to work towards.

A total of 1,092 SMEs registered for the initiative, of which 196 SMEs applied to move on to stage two of the application and evaluation process. From these 196 serious applicants, the top 100 were selected and ranked based on complete submissions of financial statements, supplemented by either a management interview or a site visit to ascertain facts and evaluate the merits of each case.

As part of the process for the SME 100, a number of UAE banks partnered with Dubai SME to help drive nominations and offer special benefits to the listed companies. These include designating them as a priority account with a dedicated relationship manager, preferential pricing, priority transaction processing at a preferential schedule of charge, high loan amount limits, low collateral obligations, reduced fees and charges on export transactions, as well as flexible repayment options.

All in all, 800 SMEs were nominated by the various banks. Essam Disi, Senior Manager, Strategy & Policy Department, Dubai SME, tells SME Advisor that his team has facilitated around 50 requests so far for the ranked SMEs to avail the benefits based on their needs, and is also working with the banks to standardise and have a common assessment process across the banks. “The ranked SMEs resemble an attractive investment pool for investors. The net turn-over of the top 100 SMEs is estimated at AED 2.3 billion and their total assets are worth at AED 1.4 billion while their combined profit is AED 220 million,” says Disi.

Abu Dhabi Commercial Bank (ADCB) is just one of the banks who partnered with Dubai SME to provide support to the SME 100 companies. Nilanjan Ray, SVP and Head of ADCB’s Business Banking Division tells us that the initiative was a “highly effective and beneficial  process” for their SME clients. As a partner, ADCB encouraged their clients to nominate themselves for the ranking, and in turn the applicants were advised by Dubai SME throughout the whole process. “We have seen 17 customers of ADCB being included in the ranking  in 2012. We have ongiong discussions with several other members of the ranking for initiating banking relationships,”says Ray. “Our association with several members of the list has reinforced our positioning with customers as leader in this segment offering comprehensive banking solutions.”

Ray also says that ADCB is planning on being on board for the next round of the SME 100 when it’s announced at the end of 2013. In addition, the bank is working on a number of other government organisations including the Khalifa Fund, in an effort to extend its services to reach more and more SMEs in need of financing solutions.

ADCB was also among the banks who took part in the SME Friendliness Index, another major Dubai SME initative which was announced earlier this year. The index ranked various UAE banks on the degree to which they lend to SMEs, as well as the number of SME clients as part of their total customer base. The report incorporated input from the banks as well as key decision makers from a large number of local SMEs. It’s main aim is to provide more clarity for both parties to make the lending process for SMEs more transparent. Dubai SME will also launch bebankable.ae in September which will act as a key online platform for SMEs to measure their readiness to receive a loan.

Corporate governance has increasingly become a priority area for both the private and public sector in the UAE. This year alone, there has been a number of events, workshops, seminars and even a legal framework put in place to encourage the SME community at large to adopt some of the best  corporate governance practices. Dubai SME was highly involved in drafting the Corporate Governance Code, and has presented a number of the SME 100 companies as shining examples in this category.  Disi also says that Dubai SME has plans to include a new corporate governance category when it announces the opening next round of SME 100. “Many SMEs have started  to adopt corporate governance practices and are considering new channels to finance their growth including attracting investors and IPOs,” Disi added.

Rushika Bhatia Editor

Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.

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