The announcement by Prince Alwaleed bin Talal bin Abdulaziz Al Saud's Kingdom Holding of a cash offer to buy shares in its subsidiary Kingdom Hotel Investments (KHI) represents another major blow for NASDAQ Dubai, which has struggled with low activity since its launch. Kingdom Holding said yesterday it would offer US$5 in cash for each KHI share.
Analysts said that anaemic trading on NASDAQ Dubai was a major factor for the offer. KHI is also listed on the London Stock Exchange (LSE), but its primary listing is on NASDAQ Dubai. KHI yesterday reported preliminary results for last year, and said it booked a profit of $21.8 million, up 27 per cent from 2008. "We expect a shy and cautious recovery in a number of our markets [this year]," Sarmad Zok, the chief executive of KHI, said yesterday.
Ali Khan, the managing director of Arqaam Capital, said: "We are seeing a trend here that companies listed do appear to be frustrated with the liquidity." The ports operator DP World and the interiors contractor Depa, which are also listed on NASDAQ Dubai, have indicated they are looking for ways to increase liquidity. DP World announced in January it was seeking a listing on the LSE. NASDAQ Dubai, which was launched in 2005 as the Dubai International Financial Exchange, has struggled to attract listings and to expand trading activity.
"Limited liquidity and low trading volumes have affected and are likely to continue to affect the share price," Kingdom Holding said. John Sfakianakis, the chief economist at Banque Saudi Fransi, said the move by Kingdom Holding was also likely to be part of a broader process of consolidation at the company. KHI owns 27 hotels, including the Four Seasons George V in Paris. @Email:firstname.lastname@example.org