Are we witnessing the homecoming of UAE companies with overseas listings? And if so, will it mean an end to local companies floating on foreign stock markets?
Those two questions occur in light of the recent moves by two of the biggest Dubai companies – Damac and DP World (DPW) – to effectively end their flirtation with the London Stock Exchange (LSE).
DPW has cancelled its full equity listing on the LSE, effective in a few days time when DPW will trade exclusively on Nasdaq Dubai, while Damac changed its London listing in global depositary receipts (GDRs) into ordinary equity on the Dubai Financial Market, where it started trading this week.
It’s worth looking at the reasons why these two giants of the local scene went to London in the first place, and why they eventually decided there was no place like home after all.
DPW justified an LSE listing in 2011 on the grounds that exposure to a pool of liquidity such as London – many times bigger than that of Nasdaq Dubai (where it had been listed since 2007) – would attract high-quality international investors into the stock and, ultimately, get it a higher rating than if it were just traded in Dubai.
Over the three years or so it was on London, DPW certainly got a higher rating, with the share price gradually recovering after the financial crisis hit it, and everything else in Dubai, hard; but that was little to do with London, it turns out.
Investors were impressed instead by DPW fundamentals, with the exposure to improving world trade and the Dubai economy booming once more after the crisis of 2009.
In fact, London trading volumes never accounted for more than 3 per cent of the total, and recently dropped to less than 1 per cent. Investors found they had all the liquidity they needed in Dubai after all.
Basically, DPW made the wrong decision back in 2011 to go to London, and should be commended for its frankness in admitting that and correcting it.
Damac is a rather more complicated case. Back in 2013, Hussain Sajwani, the founder and chairman, wanted to realise some value for all his hard work in building Damac into one of the leading property developers in the region.
The stock exchange rules in the UAE at the time prevented him from selling down shares, and an offering on a local exchange would have forced him to float 55 per cent of Damac, which he, under the best advice, decided was too much.
So he headed to London instead, where the rules are more flexible. After much consideration, it appears Mr Sajwani decided a GDR listing would get him more value for less hassle, so that is what Damac did in December 2013. About 14 per cent eventually floated in London, giving the chairman an instant windfall of around US$370 million and control of a company worth $2.65 billion.
In the year since the GDRs listed, Damac has done very well in London. When it moved to DFM this week, it was worth about $3.8bn.
Still, Mr Sajwani and his advisers are obviously persuaded that DFM, for all the volatility of its retail-dominated trading culture, will deliver better long-term value than London. In fact, it is exactly that local retail element, which presumably has a better understanding of Damac’s value than GDR investors thousands of miles away, that is the main attraction of a DFM listing for Damac.
Two further points are worth making here.
First, if Mr Sajwani were faced with the choice of London or Dubai today, he would have much more flexibility. The UAE regulator has effectively changed the rules, by giving companies such as Emaar Malls and others approval to float much less than 55 per cent and sell down founders’ capital.
Why Emaar and others were allowed the exemption, while Damac was not back in 2013, has not been explained.
Second, there are two other UAE corporates, both in the medical sector – NMC Healthcare and Al Noor Hospitals – that also sold shares in London and have done very well out of the higher rating put on their equity.
Might they be tempted back to UAE markets in some form? I have no idea, but it would be a logical thing to consider.
fkane@thenational.ae
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
COMPANY%20PROFILE
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About Proto21
Date started: May 2018
Founder: Pir Arkam
Based: Dubai
Sector: Additive manufacturing (aka, 3D printing)
Staff: 18
Funding: Invested, supported and partnered by Joseph Group
PREMIER LEAGUE FIXTURES
Saturday (UAE kick-off times)
Watford v Leicester City (3.30pm)
Brighton v Arsenal (6pm)
West Ham v Wolves (8.30pm)
Bournemouth v Crystal Palace (10.45pm)
Sunday
Newcastle United v Sheffield United (5pm)
Aston Villa v Chelsea (7.15pm)
Everton v Liverpool (10pm)
Monday
Manchester City v Burnley (11pm)
Final scores
18 under: Tyrrell Hatton (ENG)
- 14: Jason Scrivener (AUS)
-13: Rory McIlroy (NIR)
-12: Rafa Cabrera Bello (ESP)
-11: David Lipsky (USA), Marc Warren (SCO)
-10: Tommy Fleetwood (ENG), Chris Paisley (ENG), Matt Wallace (ENG), Fabrizio Zanotti (PAR)
What went into the film
25 visual effects (VFX) studios
2,150 VFX shots in a film with 2,500 shots
1,000 VFX artists
3,000 technicians
10 Concept artists, 25 3D designers
New sound technology, named 4D SRL
More on Quran memorisation:
Profile of Tamatem
Date started: March 2013
Founder: Hussam Hammo
Based: Amman, Jordan
Employees: 55
Funding: $6m
Funders: Wamda Capital, Modern Electronics (part of Al Falaisah Group) and North Base Media
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
THE BIO:
Favourite holiday destination: Thailand. I go every year and I’m obsessed with the fitness camps there.
Favourite book: Born to Run by Christopher McDougall. It’s an amazing story about barefoot running.
Favourite film: A League of their Own. I used to love watching it in my granny’s house when I was seven.
Personal motto: Believe it and you can achieve it.
Match info
Manchester United 1 (Van de Beek 80') Crystal Palace 3 (Townsend 7', Zaha pen 74' & 85')
Man of the match Wilfried Zaha (Crystal Palace)
Financial considerations before buying a property
Buyers should try to pay as much in cash as possible for a property, limiting the mortgage value to as little as they can afford. This means they not only pay less in interest but their monthly costs are also reduced. Ideally, the monthly mortgage payment should not exceed 20 per cent of the purchaser’s total household income, says Carol Glynn, founder of Conscious Finance Coaching.
“If it’s a rental property, plan for the property to have periods when it does not have a tenant. Ensure you have enough cash set aside to pay the mortgage and other costs during these periods, ideally at least six months,” she says.
Also, shop around for the best mortgage interest rate. Understand the terms and conditions, especially what happens after any introductory periods, Ms Glynn adds.
Using a good mortgage broker is worth the investment to obtain the best rate available for a buyer’s needs and circumstances. A good mortgage broker will help the buyer understand the terms and conditions of the mortgage and make the purchasing process efficient and easier.
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How it works
Booklava works on a subscription model. On signing up you receive a free book as part of a 30-day-trial period, after which you pay US$9.99 (Dh36.70) per month to gain access to a library of books and discounts of up to 30 per cent on selected titles. You can cancel your subscription at any time. For more details go to www.booklava.com
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Sinopharm vaccine explained
The Sinopharm vaccine was created using techniques that have been around for decades.
“This is an inactivated vaccine. Simply what it means is that the virus is taken, cultured and inactivated," said Dr Nawal Al Kaabi, chair of the UAE's National Covid-19 Clinical Management Committee.
"What is left is a skeleton of the virus so it looks like a virus, but it is not live."
This is then injected into the body.
"The body will recognise it and form antibodies but because it is inactive, we will need more than one dose. The body will not develop immunity with one dose," she said.
"You have to be exposed more than one time to what we call the antigen."
The vaccine should offer protection for at least months, but no one knows how long beyond that.
Dr Al Kaabi said early vaccine volunteers in China were given shots last spring and still have antibodies today.
“Since it is inactivated, it will not last forever," she said.