DP World has delayed a move that would have made it the only UAE company to seek a second listing of its shares on a western stock market. The global ports and logistics giant blamed technical issues arising from the pending merger between NASDAQ Dubai and the Dubai Financial Market (DFM) for the move.
The delay in its plans to list on the London Stock Exchange (LSE) will prevent the company from tapping into a new source of investors in addition to the thinly traded NASDAQ Dubai, where it is listed now. The company said it would not consider the dual listing again for at least 10 months. The move was a surprise, as the London listing was long discussed as a means of potentially raising the company's profile among institutional investors. Some analysts were predicting that once the listing was finalised, the company would eventually qualify as part of the closely watched FTSE 100 index, which tracks the 100 largest publicly traded companies in the UK by market capitalisation.
The decision to list with the LSE was delayed "until an acceptable system that supports the dual listing is available", DP World said in a statement to the NASDAQ Dubai yesterday. DP World said the delays were caused in part by technical challenges such as the inability of LSE and NASDAQ Dubai to accommodate a dual listing between their bourses. Those problems were compounded by delays in establishing a combined trading platform for NASDAQ Dubai and DFM.
"DP World wants to ensure that shares can be freely traded between Dubai and London without discrepancy in the stock quotes," a DP World spokeswoman said. All three stock exchanges declined to comment yesterday. The world's fourth-largest ports operator initially tapped into equity markets in 2007 at the height of the credit boom, raising almost US$5 billion (Dh18.36bn) to help finance its global expansion, repay $3.5bn of Islamic bonds and provide cash to the Dubai Government.
But amid the global economic downturn the stock has foundered on the NASDAQ Dubai, where it has been the only share traded on some days. Its shares fell 4.7 per cent to 46 US cents yesterday as investors perceived the change in listing plans to be negative for the stock, which has gained about 7 per cent so far this year. "Investors are seeing that the LSE listing would have helped to give stability to the price of the stock generally," said Saad Chalabi, an institutional trader at AlRamz Securities, which is based in Dubai.
The lacklustre share performance has seemingly not affected the company, which is in a "strong financial position", Moody's Investors Service said in April. "They have no funding requirement, in our view, for a good 24 months," the credit ratings firm said. DP World has the most diversified holdings globally of the top ports operators, with 49 terminals and 12 new developments across 31 countries.
This year, the company is planning another $800 million in capital expenditure as it adds two new ports to its portfolio - Callao, Peru and Vallarpadam, India. For next year, it has outlined at least one terminal expansion: Karachi, Pakistan, which is due to open in the first quarter. DP World has 23 per cent of its shares publicly traded, with the remaining 77 per cent owned by Dubai World, the state-owned conglomerate involved in property and shipping.
Since December, NASDAQ Dubai has been in negotiations to be acquired by DFM, the only Gulf stock market to sell shares to the public, in a $121m deal. The deal has been delayed several times and is now scheduled for July 11. The addition of DP World shares to the DFM platform, where volumes have also slipped of late, could provide a boost to trading. "DP World is $8bn in market cap," said Ali Khan, the managing director at Arqaam Capital, based in Dubai. "If DP world does trade on the DFM in some form, it can only help volumes on the market."
halsayegh@thenational.ae igale@thenational.ae
