Dubai Financial Market (DFM) has made an offer to Borse Dubai and The NASDAQ OMX Group to acquire 100% of NASDAQ Dubai. The offer, which has been approved by Borse Dubai and NASDAQ OMX, is valued at $121m and comprises $102m in cash and 40m DFM shares. Goldman Sachs International and Al Tamimi & Company have advised the board of directors of DFM in connection with this transaction.
The aim of this transaction is to widen DFM’s asset classes for investors, to allow the company’s shareholders to benefit from the future growth of NASDAQ Dubai and to further develop closer operational links between the two exchanges.
This transaction will bring NASDAQ OMX into the shareholder base of DFM through a minority stake of 1%. Meanwhile, NASDAQ OMX will continue to allow NASDAQ Dubai to use its brand and technology. The NASDAQ OMX stake in DFM will not require issuance of new shares as 40m shares will be transferred from DFM’s existing treasury shares and the other 40m shares will be purchased from Borse Dubai. The group will continue to be involved in NASDAQ Dubai, and will have representation on NASDAQ Dubai’s board of directors.
To fully satisfy the regulatory framework of Dubai Financial Services Authority (DFSA) and the UAE’s Securities and Commodities Authority (SCA), DFM is keen to restructure itself in the near future by establishing a new holding company.
This holding company would wholly own both DFM and NASDAQ Dubai, which would continue to operate as two distinct markets. This restructuring will enable the two markets to work in harmony within their different regulatory frameworks. DFM will continue to be regulated by SCA and NASDAQ Dubai will continue to be regulated by DFSA.
Essa Kazim, executive chairman of Dubai Financial Market, said: “Since the inception of DFM in 2000, we have remained committed to playing a vital role in developing regional financial markets through various initiatives and today’s announcement is a historic development for us and the region. This agreement is the outcome of a year-long review and ultimately aims to enhance efficiency and maximize value for all stakeholders.
“With this transaction, DFM will gain a wider array of product offerings for investors and a clearer path to integrate certain back office and technology functions with NASDAQ Dubai. Unifying the ownership structure of the two exchanges will further strengthen Dubai’s leading role as a center of capital markets and innovation that places the interest of investors, issuers and brokers first.”
Jeff Singer, CEO of NASDAQ Dubai said: “Under this new arrangement, NASDAQ Dubai will continue to function under the regulatory framework of Dubai Financial Services Authority (DFSA). Meanwhile, many investors will be able to trade seamlessly on both exchanges as key back office functions, such as custody and clearing, will be consolidated early next year.
“The combined strengths of the two exchanges will help attract new issuers, from across the region and internationally, who will be able to choose which of the two exchanges is appropriate for them according to their commercial and regulatory preferences. Through the ownership structure and closer operational links between the two exchanges, Dubai will achieve its goal of creating a powerful capital markets hub for the GCC and the wider Middle East.”
