Borse Dubai to sell Nasdaq shares worth $1.6bn

Dubai-based company will still hold more than 10 per cent of New York exchange operator once deal is completed

Borse Dubai is selling about 27 million Nasdaq shares in a secondary offering. Reuters

Borse Dubai, the holding company of Dubai Financial Market, will sell nearly a third of its stake in the New York-based exchange operator Nasdaq for $1.59 billion.

The Dubai-based company is selling about 27 million shares at $59 a piece in a secondary offering, with underwriters having a 30-day option to buy as many as four million additional Nasdaq shares, Borse Dubai said in a stock exchange filing on Tuesday.

Borse Dubai will receive all of the proceeds from the secondary offering, and the transaction remains subject to market conditions, it said.

It did not say when the secondary offering will be concluded.

Once the deal is completed, Borse Dubai is expected to hold about 62.4 million shares, or 10.8 per cent of Nasdaq.

If the underwriters exercise their option to purchase additional shares in full, its shareholding in the exchange operator will be reduced to 10.1 per cent, or approximately 58.3 million shares.

“At the completion of the offering, Borse Dubai is expected to be the second largest shareholder in Nasdaq,” it said.

Borse Dubai also intends to agree to an 18-month lock-up of its remaining Nasdaq stake, with a right to designate a nominee to the Nasdaq board.

The offering is “being conducted to enhance the capital structure and liquidity within the Borse Dubai Group”, said Essa Kazim, chairman and chief executive of Borse Dubai.

“We continue to be a long-term shareholder in Nasdaq and are invested in the success of the company.”

Morgan Stanley and Goldman Sachs are acting as joint lead book-running managers for the offering. JP Morgan is serving as capital markets adviser to Nasdaq on the deal.

Borse Dubai invested in Nasdaq in 2008 as part of a complex deal where Nasdaq acquired the Dubai company's shareholding in Sweden's OMX.

The Dubai-based company at one point was also the largest shareholder in the London Stock Exchange Group, but sold its shareholding in 2015.

In 2017, Borse Dubai and Nasdaq announced a deal to bolster the technological infrastructure of the DFM and Nasdaq Dubai and improve the post-trade practices on both exchanges in the emirate.

“The relationship between Nasdaq and Borse Dubai is multifaceted and has spanned many years. We have not only been a shareholder in Nasdaq for the past 16 years, but Nasdaq is also a key technology and brand partner for our exchange group and we believe in the strategic vision for the company,” Mr Kazim said.

Set up in 2007 to consolidate the two stock exchanges as well as current investments in other exchanges, Borse Dubai is the holding company for the DFM and Nasdaq Dubai.

The company, which is owned by the Investment Corporation of Dubai, explores opportunities in capital markets across the globe to leverage technology, liquidity, regulation and expertise, according to its website.