Here's the story of the DP World IPO (Dubai Ports World - a subsidiary of Dubai World - a Dubai government holding company) as far as I can tell. Will they ... or won't they?
This new topic was prompted by The Gulf Today appearing to regurgitate old news about the DP World IPO in Aug 2007 (they weren't the first to do something like that this year).
The DP World IPO was first mentioned in November 2005 (unless someone knows of earlier news?) in a report from the Financial Times about the finance package put together to fund the DP World takeover of P & O (remember the DP World and the US Ports saga?)
Financial Times 30 Nov 2005 wrote:
Islamic bond tied to possible Dubai Ports World IPO
Byline: IVAR SIMENSEN
The $9.3 billion (£5.4 bn) financing package put together for DP World's takeover of P&O includes an innovative Islamic bond issue that is tied to a potential initial public offering of the new group.
The financing, which also includes a $6.5 bn loan, is the largest takeover-related transaction in the Middle East to date, Barclays Capital said yesterday.
DP World plans to issue a $2.8 bn bond that is partly convertible into shares in DP World in the event of an IPO within the next three years.
The bond will not pay regular interest, in order to comply with Islamic law. Instead, investors will be paid when the bond matures, after two years.
The payment includes the right to shares in DP World in the event of a stock market listing during the life of the bond.
At the time of an IPO, the bonds would be redeemed using a combination of cash, for about 70 per cent, and shares in DP World for the remaining 30 per cent.
"This innovative structure guarantees the (bond) holders a minimum allocation in the IPO, which is very valuable in the current equity capital markets environment in the Middle East," said Nicholas Hegarty, head of investment banking in the Middle East and North Africa at Barclays Capital. Average allocation on recent public offerings has been less than one per cent due to the large oversubscriptions, resulting from strong regional demand and liquidity, the bank said.
Bond investors will retain the right to shares in an IPO for 12 months after the bonds have matured.
Bondholders will not get a discount on the share price, which will be decided by the market at the time of an IPO.
If there is no stock market listing, the bond will be settled with cash only but then the company will have to pay investors a higher yield, Mr Hegarty added.
The structure of the bond could give DP World an impelling incentive to seek an IPO.
Barclays Capital and Dubai Islamic Bank (DIB) are managing the bond issue.
In addition to the issue being be marketed to investors in the Middle East region, it will marketed as well in Europe and Asia.
The transaction is expected to be completed be the end of the year.
Barclays Capital and Deutsche Bank have underwritten a $6.5 bn loan.
Other banks are expected to join the syndication of the loan in December.
The total $9.3 bn debt package also includes a refinancing of DP World's acquisition of CSX World Terminals this year.
A few months later, in May 2006, Bloomberg and the Gulf News reported various DP World personnel saying they were committed to the IPO, but did not give much more in the way of details.
Bloomberg 15 May 2006 wrote:
"We are planning to sell shares, and it won't necessarily happen in just one or two shots," said Yuvraj Narayan, senior vice president for corporate strategy. "I expect a lot of international investor interest as we're the only really global ports business looking to IPO."
Then a few months later, a UK newspaper, 'The Observer', reported that DP World had shelved plans for a possible London listing but Bloomberg said that DP World may list in London or Dubai based on this comment from the CFO, without speculating if the Dubai listing would be the Dubai International Financial Exchange (DIFX), or Dubai Financial Market (DFM).
The DP World Sukuk, or Islamic Bonds, were listed on the DIFX, and mature in January 2008.
Bloomberg 02 October 2006 wrote:
We're committed to an IPO by January 2008 but the final decision on where to list is still to be made,'' Yuvraj Narayan, DP World's chief financial officer, said in a phone interview yesterday. Dubai is one option because it's the company's home territory, he said, while London "offers access to a large set of investors."
However, a few days later, the Gulf News reported that the DP World IPO was perhaps not on the cards after all, with comments from the Chairman, Sultan Ahmad Bin Sulayem, appearing to diverge slightly from the CFO's comments to Bloomberg...
Gulf News 11 Oct 2006 wrote:
But Bin Sulayem suggested the IPO option was not at the top of the list of these options.
"Do we really need partners? An IPO means you are going to have partners, you are not going to have freedom. Now we have the freedom to make quick decisions," he said.
The Times in April 2007 reported on the Dubai Ports World IPO, saying they were considering a DIFX or London listing, and that Shuaa Capital (SHUAA) and Deutsche Bank had been hired to investigate listing options. That didn't appear to be anything very new after the news a year before, in May 2006, which had already said Shuaa and Deutsche Bank (and others) were hired to advise on IPO plans.
The Times 30 April 2007 wrote:
P&O’s owner has hired Deutsche Bank and Shuaa Capital, a Dubai-based investment house, to consider a partial float or refinancing, just over a year after buying the British ferries and ports group.
"I don't believe listing is an option now. Not at the current time, no," Dubai World Chairman Sultan Ahmed Bin Sulayem told Reuters on the sidelines of a press briefing.
DP World, the world's third-largest container port operator, may this year sell $2 billion of shares in an initial public offering and list the stock in Dubai, Middle East Economic Digest reported.
Gulf News 13 Aug 2007 wrote:
DP World said on Sunday it has not decided whether to sell shares in an initial public offering and insisted all funding options remained open, denying a magazine report that said the port operator was planning a $2 billion IPO.
"People are making a lot of assumptions," chief executive officer Mohammad Sharaf told Gulf News.
At the end of August 2007, The Gulf Today has a newsflash about the DP World IPO ... apparently. The article doesn't include any direct quotes from the Chairman. Other media sources pick up on the article and repeat it.
The Gulf Today 28 Aug 2007 wrote:
Dubai Ports World commonly known as DP World is considering to offer a portion of its shares for public subscription as one of the available options for financing the company's expansions worldwide, Chairman of the company Sultan Bin Sulayem has revealed.
Press reports yesterday implied the company was nearing a decision over which financing route to take, but Chief Executive Mohammed Sharaf said the situation remained unchanged.
“This has been under consideration for the past two years and we are still reviewing what course of action to take,” he said.
So, almost 2 years after the first news of the Dubai Ports World IPO, this is what it looks like to me.
DP World issued a Sukuk to fund its P&O purchase, which is listed on the DIFX, and there may be an IPO one day.
The CEO and CFO seem to be in favor of an IPO, the Chairman less so.
Shuaa and Deutsche Bank were hired as advisers a long time ago, along with Dubai Islamic Bank and Merril Lynch.
All the news since November 2005 seems to just repeat what we knew then.
Another DP World IPO story surfaced yesterday. This time a Reuters report said an unidentified source told them it would be a 15.4 billion dirham IPO (20% of the company) before the end of 2007, with a DIFX listing. If correct, that dwarfs any previous UAE based IPO. The Deyaar IPO this year was the largest so far at AED 3.2 billion, a fifth of the size of the rumoured DP World IPO.
Jamal Majid Bin Thaniah (see Gulf News comment) is vice-chairman of DP World and Group CEO of DP World Ports and Free Zones World.
Reuters 11 Sep 2007 wrote:
State-owned Dubai Ports World plans to sell shares in an initial public offering before the end of the year to raise as much as $4.2 billion to finance growth, a source familiar with the plan said on Tuesday.
...
Maryam Sharaf, group chief financial officer of DP World's parent company, Dubai World, declined to comment earlier on Tuesday about possible IPOs by any Dubai World company.
Gulf News 21 Sep 2007 wrote:
"This is market speculation. We have not made a decision," Bin Thaniah said.
Ah, what's a month in Dubai without a story about a DP World IPO ?
Looks like it was Bloomberg's turn to write the story - do these financial news organisations arrange this in advance? As usual, the DP World Chairman said something like an IPO is one of the options under consideration. More news and comments here...
Dubai-owned DP World aims to sell as much as 30 percent of its shares to the public to help fund expansion, according to the people, who declined to be identified because the proposal is private.
...
An IPO is one of the options "on the table," DP World Chairman Sultan bin Sulayem said in a telephone interview late yesterday, declining to be more specific about the sale.
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