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Dubai selling out LSE stake

difc|By TAP Staff| Dubai’s stock exchange operators Borse Dubai Ltd said it was selling its remaining stake of 17.4 percent in the London Stock Exchange Group. Borse Dubai holds the biggest shareholder in the premier global exchange, valued at about $2.2 billion.

Borse Dubai is the holding company for Dubai Financial Market (DFM) and NASDAQ Dubai. Borse Dubai was created 6 August, 2007 to consolidate the Government of Dubai’s two stock exchanges as well as current investments in other exchanges, expanding Dubai’s position as a global capital market hub.

Bloomberg reported quoting knowledgeable sources that the shares are being offered at 2,250 pence to 2,400 pence apiece. The sale has demand for all the shares on offer, according to terms obtained by Bloomberg. Bank of America Merrill Lynch, Barclays Plc and Nomura Holdings Inc. are managing the deal.

The sale ends an investment first made in 2007 when Borse Dubai acquired a 28 percent stake in the London Stock Exchange from Nasdaq Stock Market Inc., as part of deal that saw Nasdaq merge with Sweden’s OMX group.

In September 2014, Borse Dubai announced the sale of 8,500,000 shares representing approximately 3.1% of the LSEG’s share capital. The sale was conducted by way of an accelerated bookbuild on 4 September. The shares were sold to institutional investors at a price of 2,020p each.

But even after the sale, Borse Dubai continued to remain the largest shareholder with a holding of approximately 17.4%. Borse Dubai said at that time that it intended to use the proceeds from this sale to fully subscribe to the rights issue, in relation to the proposed acquisition of Frank Russell Company, on its remaining holding in LSEG.

At the same time, Qatar Investment Authority also bought a 20 percent holding in the U.K. company. It now owns 10.3 percent, Bloomberg data shows, and will become the largest shareholder upon completion of Wednesday’s sale.

Shareholders across Europe are paring stakes in companies as investors crowd into the region amid a 16 percent increase in the benchmark STOXX Europe 600 Index this year. Borse Dubai sold a 3.1 percent stake in the London Stock Exchange last September.

“Borse Dubai has been a long-term shareholder and is selling its stake at a profit,” said Peter Lenardos, an analyst at RBC Capital Markets LLC. “It makes sense for them to sell shares now when the market backdrop is supportive.”

Shares of London Stock Exchange, Europe’s oldest independent bourse, have risen 14 percent this year. The stock fell 1.4 percent to 2,538 pence at close in London today. At that price the sale is valued at 1.5 billion pounds.