Global reach, regional synergy

Newsflash: the IPO of the third biggest port company in the world has not been oversubscribed 300 times. The ratio for the Middle East's largest issue, amounting to $4.96 billion, is instead a modest but solid 15 times. Modest when compared to the frenzy for IPOs in 2005 and 2006.

That said, DP World priced its shares at $1.30, at the top of the indicative range $1.00-$1.30. It will be listed on the Dubai International Financial Exchange (DIFX) on November 26, when people are expecting a jump of at least 10-15 per cent in the opening price. DP World Chairman Sultan Ahmad Bin Sulayem says there was a strong response from around the world, including the US and Europe.

Close on the heels of the offering, there have been reports about an Emirates IPO. Though these have been parried by the company, it is expected to sell 20 to 30 per cent of its shares to the public in the not-too-distant future.

Though emerging markets still remain favourites of investors worldwide, it has also been reported that frontier markets such as the Gulf countries are closing in. Within the frontier markets, when you have global brands such as DP World and Emirates, it is quite obvious there will be interest from the region and the world at large.

Yes, they are now global corporations with a growth trajectory, performance and reach that only big global corporations can boast. And these corporations know very well that to sustain this profile in terms of acquisitions (in the case of DP World) and expansion, there is no better place than the market.

But it is not only the company's performance that matters in generating such high interest. The credit should equally go to Dubai's growth as a global financial centre, now competing with major centres around the world. The Dubai International Financial Centre, which houses the DIFX, is a world-class infrastructure with rules and best practices on a par with other major centres.

Mutual relationship

In fact, the relationship should be mutual between global companies here and the financial centre to make this region more prominent. DIFC has put in place the infrastructure, but people have been voicing concerns about the stature of DIFX not having a listing of sufficient size and name. DP World has done just that. Hopefully it will continue, though we can't be entirely sure.

But we can be optimistic that DIFX will emerge to be one of the vibrant international exchanges in the region and then globally with the hope that more and more local/regional companies with global aspirations will list here. As yet, it has no equal competitor though it is itself in a nascent stage. Even if a rival comes in from one of the GCC countries, DIFX will be ahead. And competition is always good and should be welcomed.

But it is not only the company's performance that matters in generating such high interest. The credit should equally go to Dubai's growth as a global financial centre, now competing with major centres around the world.