Bank of London and the Middle East, Europe's largest Islamic bank, plans to list its shares on the exchange next month, valuing the bank at about US$503 million.
Nasdaq Dubai, the emirate’s international stock exchange, is set for its first new listing in more than five years.
Bank of London and the Middle East (BLME), the largest Islamic bank in Europe, is to list its shares on the exchange next month, valuing the bank at about US$503 million.
“With the commitment of Sheikh Mohammed bin Rashid Al Maktoum [Vice President of the UAE and Ruler of Dubai] to establishing Dubai as the economic capital of Islamic finance and BLME’s position as a market leading Sharia-compliant bank, Nasdaq Dubai is the exchange of choice for BLME,” said Humphrey Percy, the BLME chief executive.
He explained that the bank had looked at a listing on London’s alternative investment market but had been deterred by its lack of liquidity and absence of recent new listings.
It was prevented by regional market regulations from listing on any other GCC market, including Kuwait, where most of its current shareholders are based.
“Nasdaq Dubai has taken steps to make listings easier, more transparent and more dynamic,” said the chief financial officer Richard Williams. “It was also a question of our belief in Islamic finance.”
The listing is a welcome shot in the arm for Nasdaq Dubai. The last new listing was that of the jewellery group Damas in July 2008. The exchange has since then been troubled by low liquidity and trading volumes among its 12 listed equity stocks, of which only one – the ports group DP World – is regularly traded in any significant size.
There is no intention to raise new money in the listing. Mr Percy says BLME has £250m (Dh1.4 billion) in capital, enough to last for two to three years.
But he did not rule out raising new equity in the future. “It would be good to have a track record on Nasdaq Dubai if we ever did decide to seek new cash.”
BLME was set up in 2006 with backing from Boubyan Bank and other Kuwaiti investors. Boubyan (itself majority owned by National Bank of Kuwait) is its biggest shareholder with 22 per cent of the shares. The rest are held by a mix of Kuwaiti institutions and wealthy individual investors.
There is no “lock-in” mechanism in place to prevent existing shareholders from selling their shares, and BLME has had indications that between 5 and 15 per cent would choose to do so, Mr Percy said. “But we’ve also had positive noises that others might want to increase their holding,” he added.
The listing price will be $2.57 per share, equal to the weighted average of the price of private share dealings over recent years, after the existing share structure is consolidated into a holding company. It represents a 30 per cent premium to book value.
Last year, BLME reported operating income of £52.5m and total assets of £1.04bn.
BLME is active in Sharia-compliant corporate banking, treasury and wealth management in the UK, the GCC region and, via a leasing operation, in the US.
It has a Sharia supervisory board, but Mr Percy said that its executives were mainly drawn from the conventional finance field. “Recruiting Islamic bankers was not an option because the field is so narrow, so we recruited traditional bankers and trained and qualified them. It’s not difficult to understand Islamic finance,” he added.
“We are now well positioned at the heart of the Islamic finance industry across the UK and GCC and look forward to growing along with the sector.
“With the Islamic finance industry’s global assets currently estimated at $1.1 trillion and expected to reach $2tn by 2015, this is a very exciting time.”
Sayd Farook, the global head of Islamic capital markets at Thomson Reuters, said: “BLME wants to increase its visibility in the region, and it has chosen the best market for that. We’ll see more of this as Dubai’s Islamic initiative gathers momentum.”
BLME has taken on the law firm Baker & McKenzie Habib Al Mulla as sponsor for the listing, with EFG Hermes as corporate broker.
Nasdaq Dubai declined to comment.