Listing to benefit Dubai bourse

Dubai: DP World's decision to list its shares on the Dubai International Financial Exchange (DIFX) comes as a huge boost to the two-year-old bourse, which is trying to attract large regional companies.

Its parent entity Ports, Customs and Free Zone Corporation (PCFC) last year became the first company to list an Islamic bond issue on the DIFX.

"The DP World IPO will be our first anchor listing," DIFX chief executive officer Per Larsson said.

He expects further listings by large government-held companies if they decide to go for initial public offerings (IPOs).

Dubai is selling 20 per cent of DP World in an IPO that could value the company at $20 billion in one the region's biggest public share sales.

"DP World is one of the jewels in the crown of Dubai World, and we are delighted it will be the first home-grown Dubai company to be listed on the DIFX," said Sultan Ahmad Bin Sulayem, chairman of DP World and its parent Dubai World.

Asked if other Dubai World companies like Nakheel could also go public, Bin Sulayem said that unlike DP World other companies were still regional and they might be considered for an IPO after expansion.

"It is a watershed development for the DIFX. It already had international standards and laws. It needed a listing of this type," said Zahed Chowdhury, head of research at Deutsche Bank.

DP World is the world's third largest port operator by capacity and throughput. It manages 42 container terminals in 22 countries.

It acquired British port and shipping group P&O for $6.8 billion in March last year, and has signed deals to develop and operate container terminals in several countries.

DP World's owner is Dubai World subsidiary Port and Free Zone World FZE, which is also the holding company for P&O Ferries and P&O Maritime.

"DP World is well prepared for a global IPO, having reorganised to become a pure-play port operator over the past year," said Jamal Majid Bin Thaniah, vice-chairman of DP World and Group CEO of Ports and Free Zones World.

He told Gulf News in mid-September that the company's investment commitments totalled more than $4 billion.

DP World chief executive officer Mohammad Sharaf said the company hopes to have a container handling capacity to 90 million TEUs (twenty-foot equivalent units) in 10 years compared with 48.6 million TEUs at the end of 2006.

Its total throughput was 36.8 million TEUs in 2006, while the figure for the first six months of 2007 is 20.3 million TEUs.

PCFC sold $3.5 billion of partially-convertible sukuk in January 2006 to fund the $6.8-billion acquisition of P&O. The DIFX-listed sukuk matures in January 2008, and investors were given the option of converting 30 per cent of their securities into any IPO by PCFC subsidiaries. A part of proceeds from the IPO will be used to pay back the sukuk holders.

"For holders of the PCFC Development Sukuk, the IPO of DP World will be a Qualifying Public Offering (QPO) and, accordingly, a portion of the sukuk will be redeemed pursuant to its terms following the IPO," DP World said.

IPO: What subscribers need to know

Those eligible to participate in the IPO are: UAE and other GCC nationals; other UAE residents with a valid residency visa; and corporate entities organised under the laws of the UAE or another GCC country.

Minimum application amount has been set at $6,000 if the applicant is paying in dollars, or Dh20,000 if the applicant is paying in dirhams. Applications over this amount must be in multiples of $2,000 or Dh5,000.

The application expenses will be 0.5 per cent of the application amount.

Each applicant whose application is accepted by the company is expected to be allocated a minimum number of shares equivalent to $2,000 at the offer price, with the remaining shares allocated among all such applicants on a pro-rata basis.

UAE retail investors and institutional investors will pay the same price.

Eligible applicants must hold a securities account with one of the brokers and apply for shares in the UAE Retail Offer in person in the UAE or through an authorised representative applying in person in the UAE.

Individual investors must at least 21-year-old on the application date.

Applications will be available from November 4 and the last day for submitting them is November 15.

More information is available at: www.uae-ipo.com