DP World steams towards London listing

P&O is sailing back to the London stock market five years after its takeover by DP World, reported the Daily Mail.


The US$11.2 billion Dubai-based ports giant, which paid $6.42 billion for the 174-year-old British shipping company in March 2006, said it would seek a dual listing in London next week in a bid to attract new investors.


It follows a disappointing performance in its shares since they listed on the Nasdaq Dubai exchange at the end of 2007. They are still significantly below their flotation price.


DP World has been eyeing a listing in London for several years but shelved plans last June, blaming the merger between its domestic exchange Nasdaq Dubai and rival Dubai Financial Market, which it feared could create technical obstacles to its planned dual listing.


With these concerns eased, it has dusted down its plans and trading is expected to start in London on June 1.


DP World, which operates Tilbury and Southampton and is building the London Gateway container terminal, will not join the FTSE 100 as 80 percent will continue to be controlled by state-owned Dubai World.


A company needs a free float of at least 25 percent to join the top-flight index. No new shares will be issued. Rather it hopes the move will boost liquidity by enticing a broader range of institutional investors.


The flotation prospectus highlighted DP World’s indebtedness among the risks relating to the group’s business.


Specifically it stated its debt, which stands at about $7.91 billion, could impact the company’s ability to raise additional capital to fund expansion.


But chief executive Mohammed Sharaf pointed out DP World had more than $4.12 billion cash on its balance sheet.


In addition, profits at the world’s third biggest port operator rose 19 percent to $510.54 million in 2010 as the business benefited from the recovery in the global economy and trade.
This has continued into 2011 with its 49 operational terminals recording a 12 percent jump in gross volumes in the first quarter driven by growth in the United Arab Emirates, Africa and the Americas.


Sharaf said the listing on the London Stock Exchange was a “major milestone in the evolution of DP World’’.


DP World is one of the more profitable parts of financially troubled parent company Dubai World, which secured the final agreement from its lenders to restructure $25.2 billion of debt in March.
(Source:http://www.cargonewsasia.com)