DP World lines up UAE's biggest IPO

Dubai ports operator DP World plans to raise up to USD 3.5 billion by selling shares in the company though what would be the UAE’s biggest initial public offering (IPO), sources have said.

DP World, part of state-owned conglomerate Dubai World, could sell as much as 30% of its stock as early as next month, listing on the Dubai International Financial Exchange (DIFX), newswire Bloomberg reported on Thursday, quoting people with knowledge of the proposal.

The proposal values the company at around USD 10.5 billion.
The listing would be the Middle East’s second-biggest IPO after Saudi Telecom’s USD 4.1 billion IPO in 2003.

Funds raised from the sale would be used to fund expansion and honour USD 3.5 billion of convertible Islamic bonds sold last year through DP World’s parent Ports, Customs and Free Zone (PCFC), the newswire said.

If the plan goes ahead, it will finally end speculation over what has been one of the most talked about listings in Middle East history.

DP World, the world’s third-largest container port operator, has been looking into selling shares through an IPO for some time now, and the company has always said a public listing is something it is considering, but that no decision has yet been made.

Since last year when the ports operator hired Deutsche Bank and Merrill Lynch to advise on a possible IPO, numerous stories have appeared in local and international media speculating about a possible listing.

DP World Chairman Sultan bin Sulayem repeated the company’s official line on an IPO Wednesday, telling Bloomberg it was one of the options “on the table”.

Sulayem said in August that DP World may consider an IPO as one of the options for financing its worldwide expansion – the company plans to spend around USD 3.5 billion over the next five years on new projects.

He said the company would also seek other financing methods such as loans or bonds, opting for the most cost-effective option.

DP World has been hesitant about listing shares to raise capital because it would mean giving up some control over the company.

However, analysts have said that an IPO is looking more and more likely in the current financial climate because raising the necessary funds through the debt market could be difficult due to the continued fallout from the global credit crisis.