DP World owns 42 ports worldwide, and is wholly owned by the Dubai Government. In the event of a partial float, the government would retain control of the group, selling a minority stake. Under such a scenario, it is thought that DP World would be seeking to raise around $2 billion from the float.
Last year, the company shelved plans for a London floatation in the face of volatile market conditions. It was thought that DP World was planning to sell 20% of the group, in a move that would have valued the group at about $12 billion. It had appointed Merrill Lynch and Deutsche Bank to handle the sale.
Any new partial flotation of the company would probably involve some of the shares being listed on the new Dubai International Financial Exchange (DIFX). However, it is not known whether the banks are reconsidering a London listing.
Banking sources close to DP World insisted that the company can meet its existing debt obligations easily – in part because of the boom in shipping, but also because the group was forced to sell P&O’s American business, for which it raised around $1 billion.
One new concern would be local market conditions, with the Dubai stock market recovering from a sharp correction last year. In 2006, the value of stock markets across the Gulf Cooperation Council – the Arab Gulf trade bloc that includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates – halved within months.
The stock market overheated after banks extended large amounts of credit to retail investors to buy shares in newly floated companies. In some cases, new floatations were more than 300 times oversubscribed.