- Damac Properties is recommending investors convert GDRs, listed on the London bourse, into shares that would be listed on Dubai’s stock market.
- Reuters
A company needs to sell at least 55% of its stock to list on the main U.A.E. bourses – a regulation that has been blamed in part for the weak IPO market in the Arab Gulf country.
After all, most big companies in the region are owned by local families who prefer retaining majority control over their assets. That is expected to change once a new companies law is enacted in the country that will likely ease the listing requirement to about 30%. But approval for the new law could still take some time, given it’s already been years in the making.
In this scenario, property developer Damac’s plan to convert its London-listed GDRs into shares and list them on the Dubai Financial Market makes sense.
The Dubai-based company sold its GDRs in December, saying at the time that the London listing would allow international investors to participate in its growth plans, which included expanding its Dubai business model to other key markets in the Middle East.
Damac this week recommended that holders tender all of their GDRs in exchange for Damac shares. Hussain Sajwani, the company’s executive chairman and chief executive, noted that “The Offer demonstrates our confidence in our home market of Dubai and our commitment to the DFM, which will allow our large domestic investor base to trade our shares on their local market.”
The reasons for this about turn in some eight months seem pretty obvious given the Dubai story remains a positive one with both its property and stock markets continuing to do well amid an economic rebound.
For one, as Damac itself said, the Dubai listing should help boost liquidity in its shares. Trading of its London GDRs has been relatively light, though one of its senior executives in May tried explaining that by saying there weren’t many willing sellers. And by listing first in London, its listing in Dubai has become easier – helping it to bypass the more stringent U.A.E. IPO requirements.
A Damac spokesperson declined to comment on its Dubai listing plans, but most analysts and fund managers welcomed the move.
“For Damac, firstly it makes sense to get listed in a market where it operates, and secondly the move should help improve the stock’s liquidity and attract more retail investors which account for almost 80% of the U.A.E. market turnover – on an average,” said Harshjit Oza, the assistant director of research at Cairo-based Naeem Holding.
“Around 87% of Damac’s proposed handover will be in Dubai and with such high exposure to Dubai, the management cannot afford to ignore a local listing, especially when the participation from local/retail investors is huge,” Mr. Oza noted.
This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.
(via WSJ Blogs)
