Dubai Financial Market (DFM) said that its landmark initial public offering (IPO) is now open for subscription. Dubai Government, the founder and main shareholder of DFM,intends to offer AED 1.6 billion (US$ 435 million), representing 20% of the DFM share capital of AED 8 billion, through this IPO. The IPO starts Sunday, November 12, 2006 for 12-days and closes on Thursday, November 23, 2006.
DFM has appointed Dubai Bank as the Lead Advisor, Manager, Arranger and Book Runner. Dubai Bank has appointed 16 receiving banks, namely, Emirates Bank International, National Bank of Dubai, Commercial Bank of Dubai, Commercial Bank International, Emirates Financial Services, HSBC, National Bank of Fujairah, Mashreq Bank, Dubai Islamic Bank, Sharjah Islamic Bank, First Gulf Bank, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, Finance House, Union National Bank and Abu Dhabi Islamic Bank.
The 1.6 billion shares on offer are divided into two offerings, the private offering of 720 million shares and public offering of 880 million shares. The private offering (or preferential allocation) is meant for specified investors and includes the current national employees of the Government of Dubai, employees of Companies owned 100% by Dubai Government, retired nationals from Dubai as well as companies where the Dubai Government owns not less than 99% of its equity. Other segments of the private offering comprise stock brokerages and listed companies, both considered by DFM as an integral part of its huge success since its incorporation,
DFM shares offered through the IPO are priced at AED 1 (AED One) per share, a kind gesture by H H Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and prime minister of UAE, Ruler of Dubai. In addition, there is an “offering cost” of AED 0.03 per share, which covers all costs and expenses incurred on the IPO.
Essa Kazim, Director General of DFM said: “DFM’s IPO is the first of its kind IPO in the Middle East and we have heralded a new trend. Our lead advisor, Dubai Bank has appointed a record number of 16 receiving banks, in anticipation of strong demand. The best part of this IPO is that every possible class of investor has been taken into account which is a pioneering effort”
“The whole idea is to create and share wealth with Dubai Government employees, locals, our valued partners comprising brokers & listed companies, foreigners, expatriates and institutions, ensuring at the same time fair distribution amongst private & public category investors”, he added
A statement from the Fatwa committee, headed by Dr. Hussain Hamed Hassan, stated that: “DFM’s decision to become a joint stock company complies with Shari’a rules and principles. Its operations are Shari’a compliant and the Company holds no liabilities and has no investments that contradict with the Shari’a rules and regulations. DFM is allowed to maintain two books of accounts and therefore buying and selling of its shares is Halal”.
The details of the different IPO tranches are as follow:
A preferential share allocation of 720 million shares representing 45% of the 1.6 billion shares as part of the IPO is available for subscription to the following eligible investors:- 400 million shares for Employees of Dubai Government & employees of Companies owned 100% by Dubai Government and retired UAE nationals from Dubai (irrespective of who their employer was prior to retirement)
- 80 million shares for Stock Brokerages accredited to the DFM
- 80 million shares for Companies listed on the DFM
- and 160 million shares for companies where the Dubai Government owns not less than 99% of its equity
The balance of 880 million shares representing 55% of the 1.6 billion shares as part of the IPO is available for subscription to UAE Nationals, GCC Nationals, foreigners and institutions within and outside the UAE and GCC.
200 million shares for UAE Nationals who do not qualify under “Preferential Share Allocation” with a minimum subscription of 15,000 shares and a maximum of 99,000 shares.
680 million shares for Public investors from UAE nationals and GCC Nationals, Foreigners and institutions within and outside the UAE, with a minimum subscription of 100,000 shares and a maximum of 680 million shares.
DFM is a trusted brand name and is the primary listing venue in the UAE for 43 companies, (as of October 31, 2006) 6 bonds and Sukuks and 11 mutual funds. DFM provides a gamut of services ranging from listing and trade execution to clearing and settlement as well as data and information services. DFM has a network of 93 brokers. For the year 2005, DFM’s total revenues stood at AED 1.289 billion and net income stood at AED 1.253 billion.
