From Staff Reports
Dubai's ambitions to become the leading financial hub of the Middle East got yet another lift last week when the initial public offering of Dubai Ports World raised nearly $5 billion, making it the biggest IPO ever in the region.
Strong demand for the port operator's shares - priced at the top end of the range at $1.30 each - induced the firm to boost the percentage of the company's equity offered from 17% to 23%. Last week, the government-owned holding company, Dubai World, said that the $4.96 billion raised made it the largest-ever Middle East IPO, valuing DP World at $21.6 billion.
"We are delighted with the response to the IPO and pleased so many investors want to share in the future of DP World," company Chairman Sultan Ahmed bin Sulayem told journalists. "The fact the IPO has been so heavily oversubscribed reflects the market's confidence in the business, its management, and the company's potential in the future."
It also reflects the attraction of more-developed emerging markets like those of the Middle East to international investors looking to flee the financial turbulence of the Western markets - turbulence a growing percentage of experts now fear is a prelude to a major recession. Although the weak U.S. dollar is affecting Gulf countries with currency pegs to the greenback, the high price of oil and the diversified investments of the region's sovereign wealth funds are boosting growth.
The boom in Middle East investors looking to sink their petro-dollars into more long-term investments has seen the financial capitals of the West get in on the act. And the so-called "Sovereign Funds" - investment vehicles funded and managed by the state - have played a huge role.
DP World operates 42 terminals in 22 countries, but its government-owned origins generated controversy when the company acquired P&O Ports North America in 2006. By December, DP World had sold its newly-acquired American assets to American International Group. Subsequent to that, the surge of activity of sovereign wealth funds for international investments has shown no sign of slowing. Qatar and Dubai have both competed for stakes in OMX, NASDAQ and the London Stock Exchange, while Qatar nearly shelled out $22 billion for British grocer J Sainsbury.
News and Related Story Links:
- Money Morning:
Dubai's Investment Arm Grabs Stake in MGM. - Gulf News:
DP World's offering could trigger more IPOs. - Gulf Capital Corp. Investments:
IPO Market First 9 Months of 2007. - Wikipedia:
United Arab Emirates. - Economic Times:
Dubai to offload 20% in DP World; raise $3.5 billion in IPO. - MarketWatch:
Dubai to Invest More Than $1 Billion in Och-Ziff. - AHN News:
Emirates Plans $25 Billion IPO. - Money Morning Investment Analysis:
State Investment Funds: Beware of the Big New Buyers. - MarketWatch.com:
Sovereign Wealth Funds Too Big to Ignore. - Bloomberg:
Emirates Airline Says It May Be Valued at $30 Billion. - Gulf News:
Investing in a secure future. - Money Morning:
Dubai Employs the Latest Private Equity Strategies to Boost its Shifting Economy. - Gulf News:
A Crucial Element of Dubai's Ambitious Development Plan. - Wikipedia:
The Palm Islands. - Wikipedia:
The World. - Wikipedia:
Dubai Ports World. - CNNMoney.com:
MGM Mirage Works With Adu Dhabi on $3B Resort. - The Wall Street Journal:
MGM Mirage, Abu Dhabi
To Develop $3 Billion Resort. - Fool.com:
Betting On MGM. - Money Morning Investment Analysis:
DP World's IPO May Trigger Billions in Investments of State-Controlled Companies. - Money Morning Investment Analysis:
State Investment Funds: Beware of the Big New Buyers. - Forbes.com:
Dubai Ports World's Record IPO. - Forbes.com:
International Investors Dive Into Dubai. - Forbes.com:
Qatar Tightens Its Belt. - Forbes.com:
Clash of the Emirates. - Money Morning News Analysis:
MGM Mirage Steps Into the Fray Again, Partners With Abu Dhabi To Develop $3 Billion Resort.