x Abu Dhabi, UAEMonday 22 January 2018

Up to six regional firms looking to list on London exchange

The London Stock Exchange has said it is likely to see up to six Middle Eastern companies list their shares on the market in the next 12 months.

The London Stock Exchange is in the midst of securing a merger with Canada's TMX Group, the owner of the Toronto and Montreal exchanges. Anthony Devlin / Press Association
The London Stock Exchange is in the midst of securing a merger with Canada's TMX Group, the owner of the Toronto and Montreal exchanges. Anthony Devlin / Press Association

The London Stock Exchange (LSE) is eyeing up to six "likely listings" from the Middle East and GCC region over the next year, the bourse's executives said on a visit to Dubai.

These would take the form of dual listings and include the forthcoming flotation of the ports operator DP World on the London stock market later this week and the potential listing of the Qatari conglomerate Aamal, which this month announced its intention to list shares in the form of global depositary receipts on the LSE.

The other candidates come from the construction and industrial sectors and "some related to oil and gas," according to Richard Webster-Smith, the manager of international primary markets at the LSE, one of the world's largest stock markets.

"There are a number of companies that fit into that spectrum … that will be very strong candidates for offering shares to the public [on the LSE]," said Mr Webster-Smith. He added, however, that he "wouldn't expect a transport-related listing".

Among companies that are said to be considering a stock-exchange listing are Emirates Airline, Jumeirah Group and Dubai Aluminium. These are among Dubai's prized assets.

Ibukun Adebayo, who heads primary markets for the Middle East, Africa and India at the LSE, said the stock exchange was "not predatory" in seeking to snap up listings from companies in the Middle East and North Africa (Mena).

"Most of the companies listed are dual listings, and if they come to us first, they would have to have a very good reason why they are not going to list locally [first]," Mr Adebayo said.

"There's a healthy scepticism" among investors for primary listings in London for Mena companies, Mr Webster-Smith added.

A number of GCC companies have shown interest in the international markets. Kuwait Energy and Dubai's Topaz Energy and Marine previously announced their intentions to list on the London market, although both have since delayed those plans.

The UAE-based interior contracting company Depa, Egypt's Commercial International Bank and Aluminium Bahrain are among 41 Mena companies that have floated shares in the form of global depository receipts (GDRs) or ordinary shares on the LSE. GDRs are similar to shares and provide international companies with access to investors on another exchange.

The total value of share sales in the Mena region slumped 95 per cent to their lowest level in five years in the first quarter, according to a Ernst & Young report released last week.

Regional markets have struggled to revive liquidity and boost volumes as political upheaval and underperforming equities have dampened investor appetite for new listings.

Middle East companies managed to raise just US$21.7 million (Dh79.7m) in initial public offerings in the first three months of the year, compared with $420.4m in the same period last year, the report said. Borse Dubai, which holds a 20.6 per cent stake in the LSE and an 80 per cent stake in the bourse operator DFM Company, which manages the Dubai Financial Market, has been faced with the same challenges.

Unlike the Abu Dhabi Securities Exchange, which has floated three small companies this year, the Dubai exhange has yet to break a two-year hiatus for initial public offerings. Axiom Telecom, a UAE mobile phone distributor, cancelled plans in December to list on Nasdaq Dubai, the UAE's third exchange, because of lukewarm investor appetite and difficult market conditions. Axiom was reported to have then looked at London as an alternative, but no plans have been announced.

The LSE is in the midst of securing a merger with Canada's TMX Group, owner of the Toronto and Montreal exchanges.

The merger has hit delays after counterbids from the Candian regulator and business community. The LSE said it expected to close a deal with the TMX this year.