Middle Eastern hub grows stronger
Jonathan Boonzaier
4 November 2005
Tradewinds

Dubai continues to steal much of the limelight in Middle Eastern shipping as it secures its place as the region's main shipping hub.

Owners, service providers and a host of others continue to set up shop there and this year Dubai managed to lure two of the region's more prominent players, United Arab Shipping Co (UASC) and Vela International Marine. Both companies have long had subsidiary offices in Dubai but these have now are their main corporate headquarters.

Sources close to Vela confirm that the company has moved most of its corporate and commercial activities, including the office of its president, to Dubai and consolidated them with marine operations, which has been based in Dubai several years.

"Vela was feeling rather fractionalised and decided to operate everything from one location," says a well-placed source. "Dubai was chosen over Dhahran because of its ease of access, good business infrastructure and its ability to offer a good lifestyle for its expatriate community," he added.

UASC officials cite similar reasons for the relocation of most of their corporate and commercial functions from Kuwait City to Dubai. The two companies are joined by many new upstarts. These include freshly registered oil-transport company Bakka Shipping Co (Basco), which has been established by Islamic shipowners to promote business ties and friendship among Islamic countries in the region.

Basco is operating with an initial capital of $50m and is headquartered in Dubai. NITC holds a 25% stake. Other shareholders include Malaysia International Shipping Co (MISC) and Islamic Republic of Iran Shipping Lines (IRISL).

Plans are also afoot to base the main offices in Dubai for Iraqi Malaysia Oil Tankers Co, a joint venture soon to be launched between Iraqi Oil Tanker Co and Malaysian Merchant Marine.

The crown jewel of Dubai's maritime sector will be the multi-billion-dollar Dubai Maritime City (DMC) project, which is expected to strengthen the city's position as one of the world's top maritime centres.

Spokeswoman Helen Sell describes DMC as a continually evolving project of different component parts that are key to the maritime industry. "It is not just real estate," she said.

Plans have been mooted for an open ship register and a maritime court to be part of the initiatives of DMC.

Dubai has done much to attract the international shipping community but other cities around the Middle East have not. Many other countries in the region have tough entry visa requirements and cumbersome bureaucracy that hinder business. Experts all say that these countries need to wake up to these facts or else they will be left far behind Dubai.

Ports IPO could breathe life into new Dubai bourse

DUBAI, Oct 21 (Reuters) - Port operator DP World's share sale could breathe life into the Dubai International Financial Exchange, a bourse that barely attracted investor interest after a 2005 launch trumpeted as the birth of the Arab Hong Kong.

State-owned DP World will become the first company to list shares exclusively on the exchange, which will be rebranded Nasdaq DIFX after U.S. bourse Nasdaq Stock Market Inc buys a 33 percent stake under a deal announced last month.

The world's fourth-biggest global container port handler said on Sunday it would sell a 20 percent stake in what could be the Middle East's largest IPO.

"This listing is the last bit of the puzzle that has been missing for the DIFX," said Zahed Chowdhury, head of research at Deutsche Bank in Dubai.

Dubai, part of the United Arab Emirates, set up the DIFX to encourage foreign companies to raise capital in the world biggest oil-exporting region.

It is the centrepiece of a financial services hub that Dubai is building to capture some of the windfall from the region's economic growth, driven by a quadrupling of oil prices since 2002.

DIFX lies in the Dubai International Financial Centre, a dollar-based business park with its own laws and courts, that has attracted banks such as Goldman Sachs Group, Morgan Stanley, and Standard Chartered Plc.

Dubai officials said they want the DIFX to ride India's economic boom in much the same way as rise of China transformed Hong Kong from a key Asian financial hub into a global centre.

The exchange, straddling the gap in trading hours between Asia and Europe, would be a Hong Kong of Arabia, according to promotional material at the time of launch.

"The DIFX has the investors, it has the rules and regulations. The only thing that has been absent is financial instruments with significant liquidity to trade," Chowdhury said.

CANCELLED IPO

The DIFX, the region's only exchange to allow unrestricted foreign investment, started operations just before the Gulf stock markets crashed in 2006, scuppering its initial plans to list shares from as many as 15 IPOs that year.

Dubai-based Oger Telecom cancelled a $1.25 billion IPO last November on fears that tumbling Gulf markets would hit the share price after listing on the DIFX.

"The DP World IPO could kickstart the primary market," said Haissam Arabi, managing director of asset management at Shuaa Capital.

The DIFX now lists 11 companies, including two that have completed IPOs -- Kingdom Hotel Investments and Islamic lender Albaraka Turk. All have shares listed elsewhere and the DIFX stocks barely trade.

"DP World will bring that liquidity to the market," said Hamood Abdulla al-Yasi, general manager at Dubai-based Emirates International Securities. "The IPO will mean a 180-degree turn in the fortunes of the DIFX," Yasi said.

The DIFX already offers the region's only structured products platform and over $10 billion worth of bonds that comply with Islamic law, more than any other exchange in the world.

The DIFX, with the help of Merrill Lynch & Co, Deutsche Bank and Morgan Stanley, started a market in structured notes in August to attract individual investors.

Nasdaq and DIFX parent company Borse Dubai, run by former OMX Chief Executive Per Larsson, agreed last month to take over Nordic and Baltic share markets owner and technology company OMX AB in a $4.9 billion deal.

Under the deal, Nasdaq plans to invest $50 million and allow Dubai to use its name in the Middle East, North Africa and South Asia, Borse Dubai Chairman Essa Kazim told Reuters last month.

FACTBOX-Profile of Dubai port operator DP World

DUBAI, Oct 21 (Reuters) - Port operator DP World said on Sunday it planned to sell a 20 percent stake next month in an initial public offering. It could be the biggest IPO in the Middle East to date.

Following are key facts about the state-owned company.

SIZE

- DP World runs 42 terminals and 13 new developments across 27 countries from the Americas to Asia. It has a global capacity of more than 48 million 20-foot equivalent units (TEUs)

- In 2006 the company handled about 42 million TEUs. On an equity-adjusted basis it was the world's fourth largest container operator, handling almost 6 percent of the world's traffic, according to Drewry Shipping Consultancy.

EXPANSION

- It plans to increase capacity to 90 million TEUs by 2017 with expansion projects in India, China and the Middle East.

- The company plans to develop container-port operations in 23 countries, including France and Peru by the end of 2011.

HISTORY

- Established in 1999 as Dubai Ports International, the company's first contract was to manage Jeddah Islamic Port in Saudi Arabia.

- In 2004, Dubai Ports agreed to pay $1.15 billion for the international terminal business of U.S.-based CSX Corp, giving it operations in Asia, Australia, Germany and Latin America.

- Dubai Ports International merged in September 2005 with the Dubai Ports Authority, which ran the United Arab Emirates' ports of Rashid and Jebel Ali.

- DP World acquired British port operator P&O for 3.3 billion pounds ($6.8 billion). The deal, completed in 2006, gave DP World control of six U.S. terminals, kicking off a political storm in Washington over national security. The company later sold them to American International Group Inc

UAE port giant floats 17 percent stake

DUBAI, Nov 4, 2007 (AFP) - Dubai port operator DP World on Sunday launched an initial public offering for 17 percent of its shares in one of the biggest ever flotations in the Gulf region.

The company, one of the world's largest container-port operators, said at a news conference it was selling 2.822 billion shares, or 17 percent of its 16.6 billion shares, at an indicative price of one dollar to 1.30 dollar per share.

The offer, which could be expanded to up to 20 percent of the firm's shares, is open to citizens and residents of the United Arab Emirates and its Gulf Arab partners Bahrain, Kuwait, Oman, Qatar and Saudi Arabia.

The shares will also be offered globally to some institutional investors.

The announced indicative share price range would make the company worth anything from 16.6 billion to 21.58 billion dollars.

Shares will remain on sale until November 15 and are expected to list on the Dubai International Financial Exchange shortly afterwards.

"The indicative price range reflects DP World's strong reputation internationally and confidence in its future," the company's executive vice chairman, Jamal bin Thaniah, said in a statement.

DP World, which is controlled by the government of the booming Gulf emirate of Dubai, a UAE member, became a top global port operator when it acquired Britain's Peninsular and Oriental Steam Navigation Co in 2006 in a 6.9-billion-dollar deal.

But the company had to relinquish the US part of that acquisition following fierce congressional opposition to the deal on security grounds and despite having the support of President George W. Bush.

The company says it is the fourth largest marine terminal operator in the world and owns 42 terminals across 22 countries.

On October 31, the company announced it had moved into the Egyptian maritime market for the first time, buying a 90 percent stake in a container port operator for 670 million dollars.

The largest public offer in the region so far was when Saudi Telecom raised more than four billion dollars in its first-ever IPO in 2003.

DP World previously raised 3.5 billion dollars by issuing convertible Islamic bonds in January 2006 with a January 2008 maturity date.

At the end of 2006 it had a gross capacity of 48.6 million twenty-foot equivalent units (TEU), with a gross throughput of 36.8 million TEU last year.

The company says it is growing faster than the market, with volumes rising around 18 percent in 2006 compared with market growth of approximately 11 percent.

The launch of DP World's IPO came after another of Dubai's major government-owned firms reportedly indicated it might offer its shares to investors.

The chairman of Emirates airline, Sheikh Ahmed bin Saeed al-Maktoum, told The Times of London last month the DP World IPO was a "very positive thing. I think for sure Emirates will also, in the future, do something like that."

The newspaper said the IPO could value the carrier, the fastest growing airline in the Middle East, at up to 20 billion dollars.

Dubai is also aggressively expanding its global holdings.

Government-controlled or backed firms and investment funds have chased strategic targets such as European aerospace giant EADS, owner of Airbus, in which Dubai International Capital bought a 3.12-percent stake, and brand names like the upscale Barneys New York retail chain, which Istithmar, another investment arm of the emirate, wrested from a rival Japanese bidder.

Dubai Ports to sell more shares in $5 bln IPO

DUBAI, Nov 19 (Reuters) - Dubai increased the stake it will sell in port operator DP World to 23 percent from 20 percent, on Monday saying strong demand would allow it to raise up to $4.96 billion from the Middle East's largest initial public offering.

DP World, the fourth-largest mover of containers, will sell 3.245 billion shares plus a greenshoe, over-allotment option of 572.7 million shares, the company's state-owned parent, Dubai World, said in a statement.

"We have seen strong demand both internationally from institutional investors and in the UAE from retail investors," Dubai World Chairman Sultan Bin Sulayem said in a statement.

DP World had been looking to sell 2.822 billion shares priced at between $1 and $1.30 each, and probably a further 498 million shares as part of the greenshoe option to raise a total of $4.32 billion at the top of the range.

Of the IPO proceeds, 25 percent will go to investors who bought $3.5 billion of Islamic bonds that DP World's then owner -- Ports, Customs & Freezone Corp -- sold in 2005.

The bonds, of which as much as 30 percent of the value are convertible to shares in DP World, mature in January.

DP World, which last year bought British port operator P&O for $6.8 billion, manages 42 terminals in 22 countries.

It plans to almost double capacity to 90 million containers by 2017, expanding in countries including the UAE and China.

Final pricing for the DP World sale, the biggest since Saudi Telecom Co raised $2.72 billion in 2003, should take place around Nov. 21, Dubai World said.