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‘Business as usual’ for DP World in the UK post-Brexit

‘Business as usual’ for DP World in the UK post-Brexit
DP World chief Sultan Ahmed Bin Sulayem rang the market opening bell at Nasdaq Dubai on Monday then moved swiftly to dampen alarm bells surrounding the company’s London terminal in light of Britain’s unexpected vote to leave the European Union.

Bin Sulayem, group chairman and ceo of DP World, was invited to headline the bell-ringing ceremony to celebrate the listing of the global terminal operator’s new $1.2bn Sukuk on the Dubai exchange.  

Later he said DP World did not expect to see significant impact on cargo throughput at London Gateway terminal despite the UK Brexit vote. "Our ability to continue facilitating UK trade with the rest of the world remains unchanged, regardless of the UK’s membership of the EU. It is very much business as usual for DP World in the UK,” Bin Sulayem told Arabian Supply Chain.

"DP World provides world-class marine and logistics services across the UK, Europe and the rest of the world and we continue to provide our customers with the highest standards of service they expect to receive.”

DP World has been one of the most active stocks on the Dubai exchange this week and one of only two securities in the red at the close of trading today, falling from $16.940 to $16.700, or 1.42%. As a relatively insignificant blip it is premature to peg to the Brexit vote although the DP World stock has significantly tumbled from a three month high of $19.30 in late April after a bullish 2015.

A brighter note is the Sukuk which was listed on Nasdaq Dubai on 1 June 2016 and is the company’s fourth debt listing on the exchange.  

The new sukuk was priced at a fixed coupon rate of 3.91% maturing in 2023, replacing over $1.1bn of the 2017 6.25% coupon Sukuk. DP World has kept Sukuk’s dual listing on the London Stock Exchange reflecting the same listing arrangements as the old issuance, in line with the tender offer.

The issue initially attracted investment from 25 countries across the Middle East, the US, Europe and Asia and was two times oversubscribed, receiving more than $2bn in bids. The $1.2bn raised will fund the tender offer along with general corporate purposes.

A Sukuk is an Islamic financial certificate, similar to a bond in Western finance, which complies with Sharia (Islamic religious) law. Since the traditional Western interest-paying bond structure is not permissible, the issuer of a Sukuk sells an investor group a certificate, and then uses the proceeds to purchase an asset, of which the investor group has partial ownership. The issuer is contractually obliged to buy back the bond at a future date at par value.

For the 12 months ending 31 December 2015, DP World reported a 31% year-on-year increase in net profit to $883m.