Boulder Steel became the second Australian company to list on the Dubai International Finance Exchange (DIFX), while a third, Monarch Gold, expects to follow suit within the next two months.
The expanding Aussie presence on the fledgling exchange is an indication of the burgeoning trade links between the UAE and Australia.
Citigold Corporation was the first Australian company to join the DIFX when it listed in March, while Boulder Steel has sought exposure to the UAE market as it builds a $150million (Dh550m) seamless tube finishing plant in Sharjah.
This will be operational by 2009 and will provide 30 per cent of the company's capacity. "As the region's international exchange, the DIFX is the ideal market for us to attract investors from across the Middle East," said Carl Moser, the General Manager of Boulder Steel.
"The exchange's close links to retail and wholesale brokers make it an excellent platform as we expand our business." The company has a market capitalisation of $190m (Dh697.3m) and is also listed on the Australian Stock Exchange as well as exchanges in Germany.
"We believe the DIFX will grow," said Peter Wallner, the managing director.
"This is only a start. Dubai is the hub between Europe and Asia and this is absolutely the reason for coming here.
"Two other Australian companies have approached us for advice about listing in Dubai." Australia is enjoying a resources boom as high demand from China drives up the price of commodities such as gold, steel and copper.
In the 12 months from May 2005, trade between the UAE and Australia totalled Dh11.27 billion. Merchandised imports from Australia accounted for Dh5.03bn, with the four largest sectors being vehicles, non-monetary gold, meat and zinc. This represents a 29 per cent year-on-year growth and makes the UAE Australia's 18th most important export destination.
From the UAE's perspective, Australia is the country's 21st most significant source of imports, accounting for one per cent of all imported goods.
Monarch Gold will join the DIFX as the firm seeks to attract investment from GCC.
"The DIFX offers clear legal and financial structures that parallel the world's most advanced exchanges, therefore listing here makes perfect sense," said Michael Kiernan, the Monarch Gold's Executive Chairman.
"Our goal is to have about 15 per cent of Monarch's shareholding based in the UAE region." Monarch Gold's proposed DIFX listing marks the company's shift from exploration to production.
It has tenements totaling 3,500 square kilometres in Western Australia, providing a resource base of 2.4 million ounces. "The DIFX is in its infancy and we have made this application to give local investors the chance to benefit from Australia's resources boom," said Kiernan.
Strong vetting process
The DIFX must ensure it maintains a strong vetting process for potential members, Michael Kiernan, Monarch Gold executive chairman, has said.
Kiernan took over the near-bankrupt Consolidated Minerals in 1998 and expanded its market capitalisation from $10m (Dh36.7m) in 1999 to $700m (Dh2.5 billion) today.
The company was listed on London's Alternative Investment Market (Aim) in 2003 and Kiernan sees many similarities between it and the nascent Dubai index.
He said: "The Aim market is choc-a-block at the moment and benefits of listing on it are not as great as when we did.
"One of the Aim's problems is a lack of liquidity because there are about 700 companies listed but only about two dozen institutions buying and selling on the exchange.
"It will be important for the DIFX to avoid a similar problem by continuing to have a strong vetting process.
" The DIFX must make sure it is not overwhelmed by the number of companies listing," he said.
By Matt Smith
© Emirates Today 2007
