A new financial exchange planned for Dubai expects around 15 companies to list shares through initial public offerings during its first 18 months of business, the chief executive said on July 13. "Some big investment banks are working on some big IPOs," Steffen Schubert, CEO of Dubai International Financial Exchange (DIFX), told Reuters in an interview.
"We have up to 15 companies with potential IPOs in the first 18 months."
He said he expected the first initial public offering to be announced in late August, with shares likely to be listed on DIFX in late September or early October.
Schubert said a number of issuers were planning to list debt and equity securities, as well as investment funds, on DIFX on September 26, the planned launch date. He declined to name them.
Schubert said the first equity listings would probably be depository receipts from companies listed on other exchanges.
"Launching an exchange is a process, not an event," Schubert said. "September 26 is important to us, but we expect the market to develop over a number of years."
Dubai, a thriving trade and tourism hub in the energy-rich United Arab Emirates, wants to extend its reach into financial services through Dubai International Financial Centre (DIFC), a state-run free zone that opened in 2004 and will include DIFX.
DIFX opens in September promising corporate disclosure and market transparency regulations on a par with those of New York, London and Hong Kong to attract international investors, issuers and intermediaries.
The Arab world is home to around a dozen national stock exchanges with a reputation for patchy regulation and offering only limited access for foreign investors.
DIFX wants to attract the biggest brokerages and investment banks as members, and listings from companies across the Middle East, Africa and south Asia.
Schubert said the main interest from issuers was from companies in the Arab world, South Asia and North Africa.
He said a number of leading European, United States and Arab investment banks were in advanced talks with DIFX to become members of the exchange.
"I expect that within our first year of operation, those companies that represent up to 80 percent of the volume on the London Stock Exchange as brokers and investment banks will be present in our market," said Schubert.
Brokers can set up a physical operation at the exchange in Dubai, or act as remote brokers from outside the region.
"They are all interested," said Schubert. "The markets in Europe are all flat. All of these brokers are keen to connect to markets that have a positive economic outlook." Last month, HSBC Holdings Ltd said it wanted to become a founder member of DIFX.
DIFX is currently waiting for the Dubai Financial Services Authority, the independent regulator of DIFX, to grant a licence to operate an exchange.
Schubert said some investment banks were developing equity derivative products, with the first derivative products likely to be listed in late 2006.
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