Dubai: Dubai aims to raise as much as $4.32 billion in the Middle East's largest initial public offering (IPO), selling a stake in container-port operator DP World to pay creditors and spur trading in its new exchange, Reuters reported Sunday.
DP World, the world's fourth-largest mover of containers, said on Sunday it will sell 2.822 billion shares priced at between $1 and $1.30 each, and probably a further 498 million shares as part of a so-called greenshoe option.
Combined, the shares are equivalent to 20 percent of the state-owned company, valuing it at as much as $21.6 billion.
"We want people to share in our success," DP World Chief Executive Officer Mohammed Sharaf told reporters in
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.
"The shares are expensive relative to UAE stockmarkets," said Mohammed Yassin, managing director of Dubai-based brokers Shuaa Securities, who calculates DP World's share price at the top of the range at 50 times expected earnings this year, and 29 times for 2008.
The two domestic UAE bourses in
""There could be an opportunity to make some money in the short-term ... but you could also lose money. You have to be a long-term investor," said Yassin, whose Shuaa Capital parent company is one of the four banks advising DP World.
DP World, which last year bought British port operator P&O for $6.8 billion, made a profit of $191.8 million in 2006, including almost 10 months of earnings from P&O, according to the IPO prospectus.
A price-to-earnings ratio of 50 implies profit this year of $430 million. DP World's Sharaf declined to give any earnings forecast.
DP World, which manages 42 terminals in 22 countries, handled 23.5 million containers last year, equivalent to 6 percent of the global total.
It plans almost double capacity to 90 million containers by 2017, expanding in countries including the
"The offer price is based on our expansion plans now, on what we know today" Yuvraj Narayan, DP World's chief financial officer, told Reuters after a meeting with reporters.
"Imagine what we don't know...our customers are always telling us to go here and there," said Narayan, pointing to
DP World is the third port handler selling shares this month.
Shares of
HHLA set the issue price for the 22 million shares at 53 euros each, at the top end of a bookbuilding range, raising 1.16 billion euros in an IPO that was more than 10 times oversubscribed. DP World shares will list on the Dubai International Financial Exchange (DIFX), a bourse the emirate set up in 2005 to operate according to international regulatory and accounting standards, and tap an expected boom in regional IPOs.
It was a boom that never happened as a regional stock market rally in 2005 turned into a rout the following year, with indexes such as
The DIFX, a dollar-based exchange with no restrictions on foreign investment, lists 11 companies. All have shares listed elsewhere and barely trade on the DIFX.
The Nasdaq Stock Market Inc plans to take 33 percent stake in the DIFX as part of a deal with DIFX owner Borse Dubai to take over Nordic and Baltic stock exchange operator
The DP World sale, the biggest since Saudi Telecom Co raised $2.72 billion in 2003, closes to retail investors on Nov. 15 and the shares list on Nov. 26.  [
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