DP World makes quiet London debut

Shares in DP World, the port operator, were lacklustre on the first day of trading as investors looked to a future sell-down by the company's parent for future liquidity.
DP World, the third-largest port operator, owns the Jebel Ali Port, which is the largest in the Middle East. Charles Crowell / Bloomberg News
DP World, the third-largest port operator, owns the Jebel Ali Port, which is the largest in the Middle East. Charles Crowell / Bloomberg News

DP World's debut on the London Stock Exchange yesterday failed to excite investors, but the potential for the company's majority owner to sell more shares gained traction among market players.

Investors and market analysts downplayed the company's first day of trading but looked to its biggest shareholder, Dubai World, as a signal of DP World's future trading activity.

Dubai World owns 80 per cent of DP World and revealed in the port operator's prospectus published before the London listing that it would consider selling a portion of its stake to repay debt due by the end of this year.

Shares in the world's third-largest operator of container terminals were at one point trading on the London Stock Exchange (LSE) at a premium of 1.7 per cent over Tuesday's closing price on Nasdaq Dubai, where the company is also listed, and reached 880 pence.

But the stock soon capped any gains it made and traded largely flat throughout the day. It ended at 830 pence per share. No new money was raised in the listing, which took the form of "depository interests", or quasi-equity. The listing on the LSE allows DP World's shares to be fully fungible across both exchanges.

"The aim is to provide an additional platform to invest in DP World shares to help attract a broader range of investors," the company said in a statement posted on the LSE yesterday.

At present, the company is not eligible for inclusion on the FTSE 100 Index, despite theoretically qualifying with its overall market capitalisation of about US$11 billion (Dh40.4bn). One reason for the exclusion is that only 20 per cent of DP World's shares are publicly traded.

Analysts said a future sale of more shares was conceivable if the price rose high enough.

"DP World has a strong long-term story, but from my point of view the price is already fairly valued in the market," said Samir Murad, an analyst at NBK Capital in Kuwait.

"But over time, as the global economy improves and trade activity increases, we could realistically see a gain," he said.

Redwan Ahmed, the vice president at EFG-Hermes in Dubai, said Dubai World had long wanted to sell some of its stake in DP World to the market.

"The intention has always been that Dubai World is a sell-down stake, and though the appreciation of the share price [on Nasdaq in the past few weeks] was already priced in, in the long-run Dubai World has been keen to improve liquidity," he said.

DP World's listing brings the number of Middle Eastern companies on the LSE to 41, with a total market capitalisation of £6.2bn (Dh37.33bn).

In the past 10 years, companies in the region have raised £2.9bn in London.

LSE executives last month said the exchange was weighing a further four Middle Eastern companies as "likely listings".

DP World closed up 0.9 per cent at $13.57 yesterday on Nasdaq Dubai.


Published: June 2, 2011 04:00 AM


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