Dubai Mercantile Exchange sells 20% Stake to Goldman, Vitol
Dubai Mercantile Exchange, a venture with Nymex Holdings Inc., sold a 20 percent stake to financial firms including Goldman Sachs Group to attract more international investors to the bourse, according Bloomberg.
Morgan Stanley, Vitol Group and Royal Dutch Shell Plc also bought a share of the stake, Ahmad Sharaf, chairman of the exchange, said today in a conference call in Dubai.
“We now have the benefit of experienced traders to help develop new contracts,” Sharaf said. “It is a vote of confidence in the exchange.”
Dubai is spending billions of dollars on finance and tourism projects to cut its dependence on oil revenue. The Dubai International Financial Exchange has attracted banks including Morgan Stanley, Merrill Lynch & Co. and Deutsche Bank AG as it seeks to be the preferred location in the Gulf for foreign financial firms.
DIFC Investments, a unit of DIFC, bought a 2.2 percent stake in May 2007 in Deutsche Bank AG for about $1.8 billion. Nasdaq OMX acquired a 20 percent stake in February in Borse Dubai, which owns the sheikhdom’s two stock markets, DIFC’s Dubai International Financial Exchange and the Dubai Financial Market.
The Dubai Mercantile Exchange has traded futures contracts based on high-sulfur, or sour crude oil, from Oman since June 2007. It offered financial contracts this year for Brent and Oman crude. Trading volumes have been negligible compared with well- established markets such as New York Mercantile Exchange. On Aug. 8, 993 contracts were exchanged in Dubai, while 606,710 were traded in New York.
“Having such powerful and well-connected companies in the industry join it should be good for the DME,” said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. “I assume those companies will be obligated to support the exchange with liquidity.”
The exchange is a venture of Nymex Holdings Inc., Dubai Holding LLC and the Oman Investment Fund, which have stakes of 25 percent each. Dubai Holding is chaired by Mohammed al-Gergawi and also owned by Dubai’s ruler.
The new equity partners will own part of the 20 percent stake, Sharaf said in a phone interview. The remaining 5 percent will be held by floor traders, he said.
Dubai Gold & Commodities Exchange, the city’s other commodities exchange, started trading West Texas Intermediate and Brent oil futures contracts in May.