Saudi Arabia: Master developer Dar Al Arkan heads to London Stock Exchange, will other Gulf businesses follow?

Dubai: There will be a lot riding on Saudi master-developer Dar Al Arkan’s plans to list its international operations on the London Stock Exchange some time during the next few weeks. Because the listing also re-opens possibilities for other Gulf-based enterprises to consider a potential presence on the LSE after a rather barren phase since 2019.

“The last such listing (from the Gulf) on the London exchange was by (Dubai-based) Network International, which listed in 2019,” said Junaid Ansari, Head of Investment Strategy & Research at Kuwait’s Kamco Invest.

“There are three listed equity stocks on the LSE that have their parent companies domiciled in the Gulf. These include Network International (Dubai), Gulf Marine Services Abu Dhabi) and RA International Group (Dubai). In 2022, shares of Network International gained 2.0 per cent while shares of RA International and Gulf Marine witnessed steep declines of 73 per cent and 19.3 per cent, respectively.”

Not just that, the LSE also saw the de-listings of NMC Health and of the financial services holding company Finablr (parent company of the one-time market leader in remittances, UAE Exchange Centre). Both enterprises were once owned by B.R. Shetty.

Dar Al Arkan’s plans

It was last week that Dar Al Arkan confirmed the intention to create an operating company – Dar Global – that would then list on the LSE. This company will oversee all of the developer’s non-Saudi interests, which spans Dubai, Oman, Qatar and in the UK and Europe too.

Dar Global is the new name of Dubai-based Dar Al Arkan Real Estate Development. The LSE listing will include sale of a 12 per cent stake in Dar global to strategic investors. (The parent company is listed on the Saudi Tadawul.)

Some analysts were surprised by the decision to seek a London listing, saying that a local stock market presence was what they had been expecting. Ansari, however, believes that Dar Al Arkan was thinking of an international exposure to attract buyers for its geographically spread out projects.

“The listing plan of Dar Al Arkan’s Dubai unit in London should give the company the required visibility,” said Ansari.

As the unit would be the holding company for the parent company’s international operations spanning from China to the UK. The listing would also give greater access to international investors in a developed market like the LSE.

- Junaid Ansari of Kuwait’s Kamco Invest

Plus, Dar Global will be part of the Official List under the UK Financial Conduct Authority (FCA), and as such governed by higher transparency and reporting guidelines.

The 12 per cent stake sale in Dar Global ‘will be available only to qualified investors via private placement’, said Vijay Valecha, Chief Investment Officer at Century Financial. “Dar Al Arkan has had some notable initiatives, including a deal with The Trump Organization for a $4 billion Oman project, opening an office in Beijing, and launching premium residences - Les Vagues by Elie Saab - in Qatar. On Tadawul, the shares were up 16.2 per cent over the past year.” (The stock is trading at just under SR12 currently. Its 52-week high was in October last, when the stock went up to SR17.52.)

Will other GCC companies follow?

Market analysts say this could be the prompt for other Gulf businesses, especially those that can claim an international presence, to consider the LSE as an option. “There has been talk about some other big-scale developers planning such a move,” said one analyst. “A lot though would depend on how stock markets fare and whether the forecasted recession goes deep or shallow.

“In the second scenario, these businesses would feel they are better off with a presence in their own Gulf home markets.”