Gulf firms eye London over local markets for listings

Dubai: Gulf Arab companies seeking to raise capital are looking increasingly to London rather than to regional markets to list their shares, sending a strong signal to Gulf regulators that they need to accelerate moves to make local markets friendlier to investors.

In recent months, Dubai-based ports operator DP World announced that it was still on track to list in London, Oman's Renaissance Services has plans for a $500 million London listing of its oilfield services unit Topaz-even though the deal remains on hold awaiting better market conditions, and several other regional companies are said to be talking to banks about initial public offerings in the UK.

"The key benefits of London's market, or other well-established markets, are the access to international capital and the heightened profile," said Dale Gregory, Dubai-based partner with KPMG's transaction services.

The global IPO market has been subdued since the financial crisis of 2008-2009, but the Gulf IPO market has yet to see the signs of revival that have emerged in London and other major financial markets.

Trading on Gulf markets is dominated by retail investors and day traders, who take a shorter-term view, while international funds remain reluctant to invest, denying locally-listed companies access to that source of funding and to the higher profile that comes with an overseas listing.

Facing investment losses and rising loan loss provisions, local banks also adopted more cautious lending practices, curtailing another funding source for regional firms.

"The local markets have a significant retail component and this part of the investor base remains very cautious towards equity investments and particularly towards IPOs," said Christopher Laing, managing director and head equity capital markets at Deutsche Bank in the Middle East and North Africa.