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DP World makes LSE debut

By Abdul Basit DUBAI -- DP World , the world's fourth biggest port operator, announced its debut on the London Stock Exchange on Wednesday.

The government-controlled company, which is already listed on the Nasdaq Dubai , has now become the first Dubai company to obtain a premium London listing.

" DP World Limited is pleased to announce that all of its 830 million ordinary shares have today been admitted to the official list of the UK Listing Authority and to trading on the LSE's main market for listed securities," the group said in an official statement on Wednesday.

The stock of the Dubai-based port operator began trade at 830 pence per share and about 157,500 shares have changed hands so far, according to the LSE website.

"There was no new capital raised as part of the listing on the London Stock Exchange. The aim is to provide an additional platform to invest in DP World shares to help attract a broader range of investors. DP World shares will also continue to trade under DP World 's existing listing on Nasdaq Dubai with its shares being fully fungible (interchangeable) across both exchanges."

DP World Chairman Sultan Ahmed bin Sulayem described the development as a "milestone" for the group. "Today marks another milestone in our history as DP World becomes the first Dubai company to obtain a premium listing on the London Stock Exchange. This is a very proud day for the board and management of DP World ," Bin Sulayem said.

The port operator's Chief Executive Officer Mohammed Sharaf said, " DP World is the only listed global port operator and we are delighted to be listed on the London Stock Exchange offering more investors the opportunity to invest in our unique company."

DP World , which operates ports from Europe to Asia, cross-listed 830 million ordinary shares to attract investors after low trading volumes in its home market.

The company raised $4.96 billion in the Middle East's biggest initial public offering in November 2007. DP World said last year it would seek a listing in London to improve investors' perception of its value after the shares slumped 68 per cent in 2008.

The Nasdaq Dubai listed stock gained 47 per cent last year and 10 per cent in 2009. The move by Dubai-based ports operator DP World to list shares on the London Stock Exchange may give its stock price a much needed fillip and also provide some short-term arbitrage opportunities, but any long term upside is likely to be capped by valuation concerns, traders say.

" DP World 's listing on the LSE will definitely improve the stock's profile and visibility for the UAE internationally," said Sachin Mohindra, a senior fund manager at Abu Dhabi-based Invest AD. Mohindra also sees some arbitrage opportunities that might arise from the dual listing, but expects the price-spread to eventually close.

DP World 's senior management acknowledged the arbitrage factor but said it doesn't concern them. "There would be a natural currency arbitrage between dollar and sterling but we are not concerned. This is pretty standard," DP World 's chief financial officer told reporters in a conference call on Wednesday.

Arbitrage allows an investor to take advantage of the difference in price of a security between two or more markets, striking deals that capitalise on the imbalance.

Many analysts reckon that while arbitrage opportunities will exist initially, these transactions will eventually be capped due to the lack of traded volumes on the stock.

" DP World 's traded volumes on Nasdaq Dubai are nothing to talk about and its listing on LSE will not change much in that sense," said a Dubai-based equities trader at an international bank.

DP World 's total number of outstanding shares decreased to 830 million from 16,600 million after a one for 20 shares consolidation earlier this month. The ports operator had issued shares at $1.30 each in its near $5 billion initial public offering in 2007.

Many of the investors who bought shares in the IPO have had no option but to hold onto them, especially given the stock's hefty slide since its debut, traders say.

After the share consolidation, its IPO price (value) shoots up to $26, a long way from Thursday's closing level of $13.33. Volumes, say traders, will therefore continue to be capped until the share price improves, but this may still be some way off given the view of many analysts that at current levels, the stock is fairly valued. The shares afterall trade on a P/E of 30.53, according to 
Zawya.com.

DP World shares have risen about 30 per cent in the past three months, after hitting a near-six-month low of $10.1 on February 22. The company on May 11 said container volumes grew 12 per cent on year in the first quarter, and it remains confident of delivering a better performance in 2011 compared 
with last year.

© Khaleej Times 2011