About Dubai
About Dubai
About Dubai
DUBAI:
THE FUTURE FINANCIAL CAPITAL
OF THE GCC
BRIEFING NOTES
22 June 2010
Hong Kong (Registered Office) Dubai (Head Office) Abu Dhabi (Branch) Thailand
th
23rd Floor, Office No. 909, 9 Floor, Building No. 163, C/o The Brooker Group Plc.
Tung Hip Commercial Building Liberty House, DIFC, Electra Street, 26th Floor, The Trendy Building
244 Des Voeux Road, Sheikh Zayed Rd, Opp. ADCB Bank, 10/190-193 Soi Sukhumvit
Central, Dubai, U.A.E. Abu Dhabi, 13 Sukhumvit Rd., Klongtoey Nua,,
Hong Kong P.O. Box 122723 U.A.E. Wattana, Bangkok 10110, Thailand
Tel: +852 2545-1518 Tel: +971 4 449 6540 Tel: +66 2 168 7114
Fax: +852 2542-4060 Fax: +971 4 447 4031 Fax: +66 2 168 7111-2
INDEX
8.0 CURRENCY 16
APPENDICES
I Major Islamic Financial Products 20
II Property and Property Ownership in the Region 21
III Who is the MAC Group? 23
The Region
• “Between the international financial centers of Europe and South East Asia lies a region of 2.1
billion people and a combined economy worth US$ 1.8 trillion in terms of GDP, growing at an
annual rate in excess of 5 per cent. Yet this vast region, stretching from the Northern tip of
North and Eastern Africa, the Levant (East Mediterranean) the Caspian, the Indian
Subcontinent and the GCC States, has not had, to date, a world-class financial centre”---
Brochure, DIFC / Dubai International Financial Centre.
• An oil boom has transformed the once illiquid bourses of the World’s top energy exporters,
taking total market capitalization in Saudi Arabia, Kuwait, Oman, the United Arab Emirates,
Bahrain and Qatar to US$ 695 billion in 2009 (high of over US$ 1,000 billion) from US$ 135
billion in 2001.
• The six Arab Gulf Co-operation Council (GCC) states are planning to invest nearly $109 billion
(Dh400 billion) on rail projects and almost $11 billion on road expansion projects during the
next nine years as a way to combat traffic congestion. It was estimated that the Gulf Arab
railway network alone will cost $20 billion to $25 billion. The 1,940km railway will connect the
six Gulf States each of which would contribute a share of the start-up capital.
• The Middle East healthcare sector is expected to be worth USD 60 billion by 2025.
The U.A.E.
• The surge last year allowed U.A.E. to maintain status as one of the richest nations in terms of
per capital GDP income, which peaked at AED195,000. The real GDP growth rate in 2007 and
2008 was 6 per cent and 7.4 per cent, respectively.
• U.A.E.’s population nearly doubled in the past 20 years as the country recorded one of the
World’s highest growth rates, averaging 5.7 per cent and Dubai being the most populated
emirate in the U.A.E. Despite the high population increase, the U.A.E. has maintained its
position as having one of the lowest unemployment rates in the developing nations, standing
at around four per cent last year.
• U.A.E. has the fourth largest confirmed reserves of crude oil among Arab countries, accounting
for 14.6 per cent of the Arab World’s total --- Unified Arab Economic Report 2009.
• A total of US$ 26.7 billion has been or will soon be spent on air and sea projects in the U.A.E.
• A further US$ 40 billion will be spent on other roads and infrastructure to expand the U.A.E.
• On a scale of zero to 100 U.A.E. was received an Institutional Investor Credit Rating of 76.5 as
on 30th September, 2009 --- Research, Institutional Investor, September 2009 edition.
• U.A.E. was ranked in the Top 20 Emerging markets for 2010 (in terms of real estate
investment) (See Appendix II).
• The U.A.E. is the world’s third largest per capita water consumer after the U.S. and Canada.
• In the U.A.E., the cost of buyer one litre of petrol and one litre of water is almost the same.
• U.A.E. also one of the major consumers of electricity. Air conditioning is one of the main power
consumers. U.A.E.’s electricity is estimated to require around $80 billion in investment over
the next 8 years to meet increasing demand. The government is planning to expand its
installed capacity of 9,500 megawatts by more than 50% over the next 10 years.
Abu Dhabi
• Abu Dhabi – the Federal Cabinet announced in September 2009 that was considering allowing
100% foreign ownership in industries established in the U.A.E. Many free zones in Dubai
already allow this.
• Abu Dhabi’s two leading Sovereign Wealth Funds (ADIA and ADIC) had around USD 425 billion
in December 2009.
• Fitch affirms Abu Dhabi at ‘AA’ with a stable outlook as of 16th September, 2009 --- Zawya
• Both the federal and Abu Dhabi governments are rated Aa2 with a stable outlook by Moody’s.
• Abu Dhabi holds 9 per cent of the World’s proven oil reserves (98.2 billion barrels) and around
5 per cent of the World’s natural gas (5.8 trillion cubic metres).
MAC CAPITAL LTD 1
BRIEFING NOTES
• Abu Dhabi’s sovereign wealth fund, Abu Dhabi Investment Authority (ADIA), currently
estimated at US$ 875 billion, is the World’s wealthiest sovereign fund in terms of total assets.
Dubai
• Dubai to become world’s fourth biggest aviation hub--Dubai alone has spent US$ 17.2 billion
upgrading and creating its two airports.
- US$ 7.2 billion on expanding the existing Dubai International Airport (60 million capacity
to be upgraded to 75 million by 2010)
- US$ 10 billion on the Dubai World Central – Al Maktoum International Airport (due to open
in June 2010 with an additional 160 million passengers per annum capacity and cargo
capacity of 12 million tonnes)”. When opened in 2010, it will be the World’s largest airport.
• Dubai to become third busiest air hub by 2011, coming closer to overtaking Frankfurt, Hong
Kong and Amsterdam airports by the end of this year – according to Centre for Asia – Pacific
Aviation (Capa).
• Jebel Ali Port is the World’s largest man-made harbour and the biggest port in the Middle East.
The area is home to 5,500 companies from 120 countries.
• Three years ago, Sheikh Mohammad promised that Dubai’s sky train would be functional by 9th
September, 2009. It was and has carried 1.7 million passengers in the first month of
operations (cost US$ 7.6 billion).
• The DIFC was ranked the World’s 7th most competitive financial hub in December, 2009.
• Despite reports to the contrary, Dubai’s population actually grew by 7.6% in 2009 to reach
1.77 million.
• Dubai’s electricity and power demand will double by 2015.
• The Dubai International Airport saw its year-on-year April passenger numbers rise by 13.9% to
3,745,016, inspite of the volcanic ash cloud that grounded flights around the world for six days
during the month.
The Gulf Co-operation Council (“GCC”) was created on 25th May, 1981 and comprised of
six member states, namely; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the U.A.E.
Non-GCC Gulf is composed of Iran, Iraq and Yemen. Other material financial markets are
Egypt and Morocco.
The U.A.E. (ADX and DFM combined) ranks 2nd in terms of market capitalization in the GCC;
Source: Markaz “Daily Morning Brief”; United Securities Yearly Report; Global Research; KAMCO Research; Bloomberg & MAC
Analysis
Abu Dhabi has also performed well in the past. IPO’s on the ADX include;
• New regulations state that all GCC citizens and corporates will be treated as “local”
for the purposes of investing and listing on the DFM and ADX (historically, only
U.A.E. Nationals qualified as local investors and only companies where U.A.E.
Nationals held the majority, could list on the DFM and ADX).
• This move should greatly increase the volumes on the local markets, with significant
funds possibly flowing from Bahrain, Kuwait, Oman, Qatar and Saudi Arabia which
will give rise to a total investor base increase of 4.2 million U.A.E. residents (of
which only around 1.5 million who qualify as local) to over 39 million GCC residents.
• In 2006, six Kuwaiti companies, one Bahraini firm and one Qatari Company have
taken advantage of this regulation change, listing their shares on the DFM. The ADX
saw five foreign companies list in 2006.
• In 2008, the DFM listed nine companies while the ADX listed just one company in
2008.
• Stock markets of Abu Dhabi, Dubai and Doha are responsible for one listing each
while Bahrain, Oman and Kuwait have not seen any primary listings this year.
• With nine listings, Saudi Arabia, the Arab World's largest economy, has been
responsible for the majority of GCC IPOs issued during the first nine months of 2009.
The Saudi bourse was also responsible for the bulk of listings in 2008, accounting for
16 of the 28 Regional IPOs.
(* All income on trading of non – compliant stocks (e.g. commercial banks) is donated to charity).
3.6 Foreign companies may also have a dual listing on the DFM and ADX.
Recent meetings with the Emirates Securities and Commodities Authorities (“ESCA”) has
confirmed that any company listed any where in the World may qualify to list on the DFM or
ADX. (i.e. Secondary Listings). Primary listings of non-GCC companies are not yet permitted
on the ADX and the DFM. They are permitted to list on the NASDAQ Dubai.
The DFM and ADX operates outside the Dubai International Financial Centre (“DIFC”) but
companies trading on the stock exchanges still enjoy many similar tax advantages and
unrestricted repatriation of funds. Foreign ownership restrictions do however apply to
investments in the ADX and DFM, varying by industry and the respective corporate
regulations.
There are a number of key drivers which will insure that the DFM and ADX will grow rapidly,
U.A.E., namely;
• New regulations proposed under the new Companies Act, are expected to soon
permit companies to sell only a minimum of 30 per cent of their enlarged issued
capital under an IPO (currently 55 per cent).
• Regulations are currently being adopted to enable IPO pricing to relate more of the
fundamental value of the company (currently based on par value).
• These changes will substantially increase the number of new issues from the family
groups (i.e. a very significant increase in IPO’s).
• The Dubai Government plans several significant new IPO’s, (such as the Emirates.
Airlines), again substantially increasing market volumes.
• The extensive surplus cash in the U.A.E. and the Region from oil revenues.
• The relatively low P.E.’s when one considers the corporate profit growth.
• Substantial population growth as imported labour, financial centers and a growing
tourism and industrialisations.
The DIFC’s vision is “To be a universally recognized hub for institutional financial services
and the regional gateway for investment”
It’s a financial free zone with its own civil and commercial laws established in 2004 in the
emirate of Dubai. The DIFC has been granted authority to self-legislate in civil and
commercial areas. Companies operating in the DIFC are subject to the Companies Law.
Financial services in the DIFC are governed by the DIFC Regulatory Law No.1 of 2004, which
also governs the operation of the Dubai Financial Services Authority, a financially and
administratively independent body created by Law No (9) of 2004 issued by the Ruler of
Dubai on 13th September 2004 (the ‘‘DIFC Law’’) that acts as the independent financial
regulator in the DIFC. Legislation, rules and regulations governing companies incorporated in
the DIFC and financial activities in the DIFC are available on the websites of the DIFC and
the DFSA at www.difc.ae and www.dfsa.ae, respectively.
It aims to develop the same stature as New York, London and Hong Kong. It primarily serves
the vast region between Western Europe and East Asia.
67%
REGULATORS
NASDAQ Dubai was incorporated as a limited liability company under the Companies Law on
29th September 2004, and was a wholly owned subsidiary of the DIFC Authority, a financially
and administratively independent body created by the DIFC Law. It is owned by NASDAQ
OMX (33%) and Borse Dubai (67%), but the Parties agree that DFM will acquire 100% of the
MAC CAPITAL LTD 8
BRIEFING NOTES
share capital of NASDAQ Dubai from Borse Dubai and NASDAQ OMX (owned as to 66.7%
and 33.3% respectively).
Dubai Financial Market, PJSC (“DFM”) has made an offer to Borse Dubai Ltd. (“Borse Dubai”)
and The NASDAQ OMX Group Inc. (“NASDAQ OMX”) enabling DFM to acquire 100% of
NASDAQ Dubai. The offer, which has been approved by Borse Dubai and NASDAQ OMX, is
valued at US$ 121 million and comprises US$ 102 Million in cash and 40 million DFM shares.
The transaction has been endorsed by DFM’s Board of Directors on 21st December, 2009 and
is subject to certain closing conditions, including the receipt of regulatory approvals. DFM will
continue to be regulated by SCA and NASDAQ Dubai will continue to be regulated by DFSA.
This transaction will bring NASDAQ OMX into the shareholder base of DFM through a minority
stake of 1% (equating to 80 million shares). Meanwhile, NASDAQ OMX will continue to allow
NASDAQ Dubai to use its brand and technology. The NASDAQ OMX stake in DFM will not
require issuance of new shares as 40 million shares will be transferred from DFM’s existing
treasury shares and the other 40 million shares will be purchased from Borse Dubai. The
group will continue to be involved in NASDAQ Dubai, and will have representation on
NASDAQ Dubai’s Board of Directors.
The total consideration for the transaction due from DFM will amount to US$ 121,304,348
and be paid as follows:
US$ 80.8 million to be paid in cash to Borse Dubai.
40 million shares of DFM Company with a value of US$ 20 million to be transferred to
Borse Dubai on behalf of NASDAQ OMX.
US$ 20 million in cash to Borse Dubai against the transfer of 40 million shares from
Borse Dubai stake to NASDAQ OMX.
To date, the NASDAQ DUBAI has adopted two sets of rules: the Business Rules and the
Listing Rules. The Business Rules govern membership of the NASDAQ DUBAI, including
eligibility requirements for financial institutions, categories of membership, rights and
obligations of members and the process for membership applications. The Business Rules
also govern procedures, responsibilities and fees regarding clearing and settlement of
securities traded on the NASDAQ DUBAI. The Listing rules govern the listing of equity, debt
and other securities on the NASDAQ DUBAI, covering such areas as eligibility of issuers for
listing, the listing application process, continuing obligations following a listing and sanctions
for non-compliance with the Listing Rules. The Business Rules and the Listing rules are
available on the website of the NASDAQ DUBAI at www.nasdaqdubai.com
The NASDAQ DUBAI is governed by its board of directors, comprised of seven non- executive
directors and three standing committees: the audit and risk management committee, the
market oversight committee and the nomination remuneration committee, all of which have
formal charters.
Many leading financial institutions, both international and regional, are market participants
on NASDAQ Dubai. Among these, 30 have been admitted as Members. These institutions can
trade and/or provide securities clearing services on the exchange.
4.4 Advantages
• The ability for companies from outside the region to list their shares on the NASDAQ DUBAI
and use their listing to tap into the large pool of investable assets in the region through equity
and / or bond financings; and
• The NASDAQ DUBAI market has developed a reputation for transparency, innovation, liquidity
and efficiency.
It is, in our view, potentially a major direct competitor to the AIM in London, the TSX
Venture Exchange in Toronto and eventually will be a major international Exchange in its
own right. The NASDAQ DUBAI is looking to the main Exchanges in London, New York and
Hong Kong as its role models.
4.5 Taxation
Unlike many “offshore” tax havens, the DIFC is a fully fledged “onshore” capital market,
comparable to Hong Kong, Singapore, London and New York.
As the NASDAQ DUBAI was only opened on 26th September 2005, it has not as yet seen the
sort of activity experienced on the DFM. It has however seen some interesting transactions;
• Investcom (a Lebanese telecommunication group), which raised US$ 741 million and was
8 times over subscribed. ( the company subscription was taken over and delisted from
the Exchange)
• Kingdom Hotel Investments - owned by Prince Alwaleed bin Talal, a Saudi billionaire and
reputed to be the fifth richest man in the world---- listed its shares on the NASDAQ
DUBAI on 1st March 2006. This listing clearly underpins the regional support for a
regional stock exchange of international standard, particularly when one considers that
Kingdom Hotels is head quartered in London.
• More recently the South African gold mining operation, Goldfields Limited, listed on the
NASDAQ DUBAI.
• The following companies were listed on the NASDAQ DUBAI as on 31st March, 2010;
Company Country Instrument
1. Albaraka Banking Group Bahrain Ordinary Shares
2. Boulder Steel*** (delisted) Australia Ordinary Shares
3. China Security & Surveillance Tech. Inc. ** China Ordinary Shares
4. Citigold Corporation Limited*** (delisted) Australia Ordinary Shares
5. Damas International Limited U.A.E. Ordinary Shares
6. DEPA Limited U.A.E. Ordinary Shares
7. DP World Limited U.A.E. Ordinary Shares
8. Fortune Management Inc. U.S.A. Ordinary Shares
9. Gold Fields Limited South Africa ADR
10. Hikma Pharmaceuticals PLC India GDR
11. Investcom LLC* (delisted) Lebanon GDR
12. Kingdom Hotels Investments Saudi Arabia Ordinary Shares
13. Man Industries (India) Limited India GDR
14. Monarch Gold Mining Company* (delisted) Australia Ordinary Shares
15. NetSol Technologies Inc.*** United States Ordinary Shares
16. Rana Sugars* (delisted) India GDR
17. Sphere Investment *** (delisted) Australia Ordinary Shares
18. Unigold Inc Canada Ordinary Shares
19. NASDAQ OMX Group Inc.*** U.S.A. Ordinary Shares
Source: www.nasdaqdubai.com
(* Delisted) (** MAC Capital advised on the listing) (*** MAC Capital was a market maker on the stock)
• A watershed moment for the NASDAQ DUBAI has been the listing of DP World – the
largest IPO in the Middle East. In November 2007, DP World listed 23 per cent of its
stock on the NASDAQ DUBAI. Although it aimed to raise US$4.96 billion, investors
interested exceeds US$75 billion in over subscriptions. This is a crucial achievement as
it has propelled the NASDAQ DUBAI from a concept to reality. The activity surrounding
the trading of DP World has cleared many of the operational cobwebs, has improved the
systems and connectivity of the market, has introduced retail investors to the DIFC for
the first time, has attracted a number of new brokers to the market, and most
importantly, has generated a substantial amount of volume.
• In 2008, MAC Capital advised on the first China-based company to list on the NASDAQ
Dubai. It was also the first NYSE Company to list its shares on that exchange.
• Equity futures are listed on 21 individual U.A.E. companies and on the FTSE Nasdaq
Dubai U.A.E. 20 share index, which has been designed as a hedging and investment
mechanism for GCC and international investors.
• The Index rose 5 per cent from 31st December, 2009 to 1,851 as on 31st March, 2010.
• Equities trading volumes on NASDAQ Dubai rose to 1.09 billion in the first quarter of
2010, their highest quarterly level since 2007, before the start of the global economic
crisis. The Q1 2010 figure was 40 per cent higher than the fourth quarter of 2009 total
of 776 million. It was also 5 per cent up on the first quarter of 2009 level of 1.04 billion.
• Equities volumes in March 2010 reached 567 million, the highest monthly figure since
2007. The total was 76 per cent higher than the 322 million shares traded in February
2010, and 90 per cent up on the March 2009 figure of 298 million. The exchange
introduced mandatory reporting of all over the counter equities trades in September
2008.
• A total of 17,110 equity derivatives contracts traded on NASDAQ Dubai in the first
quarter of 2010, up 135 per cent from 7,292 traded in the first quarter of 2009. NASDAQ
Dubai launched its equity derivatives market in November 2008.
• NASDAQ Dubai’s equity derivatives market has won the Futures & Options World (FOW)
2009 Award for "Best Innovation by an Exchange in Product Design, Middle East."
• Dr. Nasser Al Saidi, Chief Economist of the DIFC Authority said: “Though the global crisis
has caused a decline in IPO activity in the MENA region, the stabilisation in advanced
economies and recovery in emerging Asia, the region’s main trading partner, are
encouraging the business community to revive plans for new listings. The pipeline of
IPOs and M&A deals is building up and we are likely to witness a resurgence of the
market in the coming two years.”
In addition to listed equities, the listed bond market on the NASDAQ DUBAI has grown to be
the World’s largest market for Sukuks (Islamic Bonds) and hosts the World’s two largest
Sukuks, Dubai Port’s US$3.5 Billion issue and Nakheel’s US$3.52 billion Sukuk.
NASDAQ Dubai has one of the world’s largest listed Sukuk markets, with a total nominal
value of $17.3 billion.
Most recently, GE Capital, the finance arm of General Electric, listed a $500 million Sukuk on
NASDAQ Dubai on December 10. The Sukuk was the first to be issued by a major US
company and was sold to investors across the Middle East, Asia and Europe.
Currently a “Wholesale” market (no investor with a net worth of less than US$ 1 million), in
an effort to improve liquidity on the NASDAQ DUBAI, there are certain changes now being
implemented;
• Retail clients in the UAE may now trade through a local broker which has a link to a
NASDAQ DUBAI Broker (now possible). There is no financial restriction or definition in
this regard. This is not widely known yet.
• The definition of a “retail” client was reduced to US$ 500,000 net liquid asset at the end
of June, 2008.
40. Rasmala Investment Holdings Delta Securities Egypt Financial Service 29-Oct-07 15.33 51
41. Shuaa Capital Orion Holding Overseas Financial Service 12-Feb-08 52.55 20
42. Shuaa Capital Oman National Investment Co Financial Service 12-Apr-07 85.52 35
43. Unicorn Investment Bank Bahrain Financing Company Financial Services Sep-2008 1000 100
44. Waha Capital AerVenture Limited, a fully Aviation Leasing 22-Jun-2009 135.00 50
owned subsidiary of AerCap
(listed on NYSE)
Source: Zawya, News reports
More recently, M&A activity in Middle East was down 86% YoY in the first half compared to 46%
globally. Large private equity deal flow remains virtually non-existent in 2009, but we believe this
will be a high growth area as full restructuring commences.
With liquidity constraints and market volatility, we expect IPO activity to remain weak in 2009,
with potential for improvement emerging in early 2010. Even here, we would need to see markets
stabilize and valuations become richer for companies (especially family-owned businesses) to
consider equity raising as a financing option. It is entirely likely that the state will continue it part-
privatization program as a means to help pick up interest in the stock market.
Prospective IPOs in the U.A.E. Face Further Delays
Offering Size Equity
Potential Issuer Date Sector
(USD m) Offered
Al Habtoor Engineering May 2009 Construction - 40%
Al Nahda Int'l Education H1 2009 Consumer Services 198 72%
Al Yousuf Motors H1 2010 Automotive 123 30%
Alpha Tours H1 2011 Travel and Tourism 150 50%
Damac for Comm. & Ser. H1 2012 Consumer Services 245 -
Jumbo Electronics H1 2013 Consumer Goods - -
SAIB BNP Paribas AM H1 2014 Financial Services - 55%
Abraaj Capital 2009 Financial Services 1,000 -
Al Benaa Real Estate 2009 Real Estate - -
Al Fara'a Const. Group 2009 Conglomerates - -
Al Qudra Holding 2009 Conglomerates 997 55%
Al Rayan Investment 2009 Financial Services - 55%
Aswaaq 2009 Consumer Goods - 55%
Burooj Properties 2009 Real Estate - -
DAMAC Holding 2009 Conglomerates - -
DAMAC Properties 2009 Real Estate - -
Dubai Bank 2009 Financial Services - -
Dubai Properties 2009 Real Estate - -
Emirates Airline 2009 Transport 7,500-9,000 -
Emirates Post 2009 Transport 272 49%
ESCAN 2009 Real Estate - -
Eshraq Properties 2009 Real Estate - -
Future Pipe Industries 2009 Basic Materials 420-554 35%
Int'l Petroleum Invest. 2009 Financial Services 545-817 -
Mada'in Properties 2009 Real Estate - -
Manazel Real Estate 2009 Real Estate - -
Mawarid Finance 2009 Financial Services - -
Metito Overseas 2009 Power and Utilities - -
ME Broadcasting Corp 2009 Media - -
Nakheel 2009 Real Estate - -
Palm District Cooling 2009 Power and Utilities - -
Palm Utilities 2009 Power and Utilities - -
RAK Petroleum 2009 Oil and Gas - -
Rasmala Invest. Holdings 2009 Financial Services - -
Reem Emirates Alum. 2009 Ind. Manufacturing - -
Sama LelTayaran Dubai 2009 Real Estate - -
Showtime Arabia 2009 Media - -
Thani Petroleum Co. 2009 Oil and Gas - -
Thuraya Sat. Telecoms 2009 Telecoms and IT - -
Gulf Capital H1 2010 Financial Services - -
Khoie Properties 2010 Real Estate - 33%
M'sharie 2010 Financial Services - 55%
Rotana Hotel Mgmt. 2010 Travel and Tourism - -
Abu Dhabi Investment 2011 Financial Services - -
Source: Zawya
8.0 CURRENCY
The AED is pegged to the US$ at around AED 3.67 = USD 1.00. Whilst there has been some
discussion on floating the AED or repegging, few believe this will happen soon, if at all.
In 2001, the six members of the GCC – a loose political and economic alliance – agreed to set up a
monetary union like that of the European Union. The GCC single currency was initially scheduled to
be launched in early 2010 but the summit officially confirmed earlier reports that said the target
date was too ambitious and unrealistic.
Gulf States are likely to adopt a single currency in 2015 but the United Arab Emirates is unlikely to
reconsider joining the planned Gulf monetary union this year, according to a Reuters poll forecast.
Only four out of six GCC members — Saudi Arabia, Kuwait, Qatar and Bahrain — may now go
ahead with the project.
Kuwait aims to bring both the UAE and Oman back to the project during its 2010 presidency of the
Gulf Cooperation Council. Oman, which withdrew in 2006, has no plans to review its decision to
withdraw now or in the future. Kuwait is the only GCC country which pegs its currency to a basket
of currencies rather than just the dollar.
The UAE, the second-largest Arab economy, abandoned the project in protest over the decision to
base the Gulf central bank in the Saudi capital, Riyadh.
Formation of Borse Dubai – the DFM and NASDAQ DUBAI under one
umbrella
On 6th August, 2007, we saw further evidence of the commitment to make the U.A.E. a major
force in the international markets announced.
The Dubai Government announced that it would consolidate its holding in the DFM (80 per cent)
and NASDAQ DUBAI (67 per cent) into a new holding company to be called “Borse Dubai”
The DFM will still be governed by ESCA and the NASDAQ DUBAI will still be governed by the DFSA
This innovation is another step towards making Dubai a truly international financial centre.
More recently (2010), Borse Dubai announced that it would acquire the balance of NASDAQ Dubai
(33 per cent).
It was also announced that DFM and NASDAQ Dubai would merge their trading systems, creating a
single plat form for trading. This will dramatically improve trading on both exchanges.
Within days of the establishment of the Borse Dubai being announced, it was also announced that
Borse Dubai was to make a general offer for Sweden’s OMX market (at a total bid approaching
USD 4 billion), the London Stock Exchange and eventually NASDAQ. Similar moves were being
made by the Qatar investment groups.
Today, GCC groups have substantial holdings in many of the World’s major stock exchanges;
100%
100% 80%
NYSE 20%
BORSE DUBAI <-> ADX
(Notes A) EURONEXT
QATAR
100%
EXCHANGE
DFM HOLDING (QE) **
97.2% 5% 100%
MUMBAI BORSA
OMX
EXCHANGE ITALIANA
Rumours:
There are many who would like to see;
• Borse Dubai continue its current acquisition programme --- further acquisitions are
rumored to be planned in Karachi (Pakistan), Taiwan and Tokyo.
• Borse Dubai eventually list its shares on the NASDAQ DUBAI (to show further support for
that market).
• Borse Dubai: potentially to increase its interest in the LSE.
• NASDAQ OMX to offer companies applying to list in the U.S.A., simultaneous listing on
the NASDAQ DUBAI.
• ADX to merge with Borse Dubai (and therefore the DFM and NASDAQ Dubai), creating
the second largest market in the region – concept announced March, 2010.
Tel: +971 4 449 6541 Tel: +971 4 449 6542 Tel: +971 4 449 6543
Fax: +971 4 447 4031 Fax: +971 4 447 4031 Fax: +971 4 447 4031
Office No. 909, 9th Floor, Liberty House, Dubai International Financial Centre,
Sheikh Zayed Road, P.O.Box 122723, Dubai, UAE
APPENDICES
Appendix I
MAJOR ISLAMIC FINANCIAL PRODUCTS
Sukuk Asset – backed bonds. Can not be traded as paper so usually backed by
Marabaha, Ijara and Istisna’ products. These are certificates representing
undivided shares in ownership of assets or services.
Mudaraba Capital provider invests through an entrepreneur borrower, profits are
shared at a pre-arranged rate but any losses are suffered wholly by the
financer. Profit Sharing arrangement at between a capital provider and
service (labour/expertise)
Murabaha A form of loan, accounting for 85% of global Islamic finance market. A
bank agrees to buy an asset for a client and then sells the asset to the
client at an agreed mark-up price. Sale of goods at a pre-agreed cost plus
basis.
Istisna A loan backed by a project rather than a tangible asset. Payment can be
linked to progress on the project.
Ijara Rental agreement. A banks buys an asset and leases it to an end-user.
There may be an option to buy the asset at the end of the contract.
Takaful Islamically acceptable insurance. It takes away the element of gharar
(obscurity/uncertainty) and maisir (gambling), by defining all terms at the
beginning i.e. what you would receive in defined events. Moreover, it
incorporates the traditional Islamic concept of tabarru’ (gift), whereby
other policy holders agree to relinquish a certain portion of their
contributions, in order to assist other participants in greater need.
Tawarruq Deferred payment sale to buyer who immediately resells the asset/goods
for cash
Wakala Agency where the agent receives a fee for the agency services provided
Appendix II
PROPERTY AND PROPERTY OWNERSHIP IN THE REGION
*Because China skew the results for the other countries, total scores have been indexed on the basis of South
Korea at 100.
Sources: International Monetary Fund; ICON Construction reports; World Bank ease of doing business index;
Euromoney country risk index; A.T. Kearney analysis
B. PROPERTY OWNERSHIP
Appendix III
WHO IS THE MAC GROUP?
MCMILLEN ADVANTAGE CAPITAL LIMITED (“MAC”) is a company incorporated in Hong Kong and founded by Robert W.
McMillen. Together with its local partners, the Company has establishing two new stock brokers in Dubai, serving the U.A.E.
(with seats on all three markets)
MAC established a local joint venture company called MAC Sharaf Securities (U.A.E.) LL (“MAC Sharaf”), owned
49 per cent by MAC and 51 per cent is owned by the Sharaf Group and Mr. Mohammed Abdul Rahim Al Ali. This was
our first foot hold in the U.A.E. Markets. Starting as a local broker focusing on the local and GCC retail market, this
company and its affiliates will eventually hope to develop a very sound local investment banking team once regulations
allow. Much of its business will then be IPO and M&A related.
MAC Sharaf ranked in the Top 20 (of 93 brokers) in October, 2009.
A second entity, MAC Capital Limited, (“MAC Capital”), is based in the DIFC. This is our flagship vehicle in the U.A.E.
and its principal services includes;
(i) Listing international companies on the NASDAQ DUBAI (both local and foreign)
(ii) Raising capital in Dubai and elsewhere for international companies wishing to have a connection to the region.
(iii) Focus on cross border transactions in the Regions east of Dubai, particularly Asia.
(iv) Arranging joint ventures for local and international clients
(v) Brokerage on the NASDAQ DUBAI, DFM, ADSM and other global markets.
(vi) Consulting advice to its new associate, a new securities company to be formed under the ESCA regulations
The Sharaf Group of Companies was established in Dubai in 1976. The founders, Mr. Ibrahim Sharaf and Mr.
Sharafuddin Sharaf, are brothers of UAE origin. With its core business in the Shipping Industry, the Sharaf Group now
has significant businesses in Retailing, Fashion, Real Estate, Retail Electronics, Cargo, Logistics, Financial Services,
Warehousing, Travel and Tourism. It employs over 2,600 staff in 50 different locations, both locally and internationally.
The Sharaf Group may also introduce other major local family groups as shareholders to further strengthen the contact
base offered to the DFM Company. These parties include Mohammed Abdul Rahim Al Ali, a well known
businessman and advisor to the current ruler of Dubai.
MAC also has other shareholders and partners who have brokerage and investment banking interests in Hong Kong,
Paris, Japan, Bangkok, Geneva, Johannesburg, Gaborone, Harare and London.
Our international network is extensive…with our shareholders based in most of the key global financial
centres;
GLOBAL MAC
EUROPE AUSTRALASIA
Tokyo
London
Geneva
Vietnam
We strongly believe that MAC’s Team will be able to offer international investors and inter-brokers access to this considerable
market and to the capital it provides. In addition, our management’s track record also demonstrates our ability to achieve our
targets. In this regard, consider,
1.0 We have equity interests in two brokers, one with seats on the DFM and ADX and the other with a seat
on the NASDAQ DUBAI
Seamico
• Three months after the commencement of the Asian Crisis of 1997, the Team rescued a local Thai broker
from near collapse in 1997 to build it to a ranking of Thailand’s third largest broker.
• The company, Seamico Securities Plc, had a market capitalization of Baht 259.53 million (US$7.11 million)
and subsequently hit a high of Baht 10.37 billion (US$ 263.12 million).
• Prior to our exit, it had 10 offices and over 600 staff and is still managed by the same team.
Raimon Land
• In addition, Mr. McMillen, working closely with an investment syndicate and the management team of
Raimon Land Plc, a then failed property company, that was suspended from trading on the Stock Exchange
of Thailand, invested Baht 100 million (US$ 2.5 million) to acquire 80% of the company.
• Today, Raimon Land has a market capitalization of Baht 2.8 billion (US$ 87 million), with over Baht 15
billion of completed projects and projects under development.
• Almost half of Raimon’s shares were recently sold to IFA Hotels and Resorts (24.99%) and Istithmar Hotel
FZE (24.99%).
In the past, our Chairman has led a securities company to win the following awards;
• Winner “Best Under a Billion”, Forbes Global 200 Best Small Companies for 2003.
• Winner “Best Under a Billion”, Forbes Asia/Pacific 100 Best Small Companies for 2004.
• Winner “Best Under a Billion”, Forbes Asia/Pacific 200 Best Small Companies for 2005.
• Winner “Triple A Best Equity House Thailand 2003”, The Asset Magazine.
• Winner “Best Local Broker”, FinanceAsia Magazine for the years 2001, 2002, 2003 and 2004.
• Top 50 Companies in Thailand ranked on Corporate Governance.
• Top 3 Securities Companies, ranked by Corporate Governance Standard 2006 (Thailand).
• Promotion to a component member of the Stock Exchange of Thailand 100 Index
2.3 Group companies managed or formed by the Team won the following awards;
• Raimon Land Plc: “One of the 12 Best Property Companies in Asia”, Euro Money Magazine, 2004
• Seamico Knight Fund: “Best Asia Ex Japan Fund Award 2003 (Fund of the Year)”, Asia Hedge
Fund Magazine.
• The Team has held very senior positions in Thailand, Hong Kong, London, Australia and South Africa.
3.2 Extensive cross border experience, with major international corporate clients
• The Team has extensive cross border corporate advisory and investment banking experience.
• Major clients it has acted for or which have acquired companies from its clients include: APC Group, Asia
Pacific Wire & Cable Corporation Limited, AXA Insurance, Capital Z, Guardian Insurance, HIH Winterthur
International Holdings Limited, Lend Lease Global, Manu Life, National Mutual, Newscorp, NRMA Insurance
Limited, Prudential Insurance of the UK, QBE Insurance, South China Morning Post, Standard Chartered
Bank Plc., the Koos Group, United Broadcasting Corporation Plc, and Keppel Group.
3.3 A Team skilled in international broking and investment banking, holding positions with;
Since 1992, the Team has developed significant in-house expertise in the following sectors:
4.0 The Team has a proven track record in Introducing New Products to Developing Markets;
In the U.A.E., we are the
• First “Start up” firm to obtain a Category 2 license in the DIFC;
• Advised on First Chinese Company to list on the NASDAQ Dubai;
• Advised on First NYSE listed company to list o the NASDAQ Dubai;
• First Broker to trade on Australian dual-listed stocks
• First Broker to trade on USA dual-listed stocks
• One of only 12 brokers who can arrange trades on all four U.A.E. markets.
• The first Initial Public Offering under the Securities and • The first Right Issue, coupled with a Special Dividend
Exchange Act (“SEC Act”) and Warrants
• The first Conditional Application to conduct an Initial Public • The first Right Issue with Warrants, issued below par
Offering under the SEC Act.
• The first Public Tender Offer under the SEC Act • The first Warrant Issue in Thailand with a 10 year
term.
• The first Underwritten Debenture with Warrant by Rights under • The first Pre-Approved Exemption from Clause 30
SEC Act (Delisting) regulations
• The first Non-public Offering of a Pre-IPO Convertible under • The first Capital Reduction, simultaneous with a Rights
the SEC Act Issue
• The first five year Call Warrant issued by Rights • The first IPO and Listing on the MAI (Second Board)
• The first Employee Share Option Programme where more than • The first IPO with Warrants attached in Thailand (and
5 per cent of the Company’s capital was issued to employees on the MAI)
• Called the first (and second) Call Warrants • The first IPO with Warrants attached on the Stock
Exchange of Thailand
• The first Rights Issue with Concurrent Special Dividend
Joining the Team in this venture are international brokerage and investment banking partners from around the World,
particularly;
• Abu Dhabi • Australia • Malaysia • Zambia • Singapore
• Dubai • Sweden • Hong Kong • Namibia • France
• Bahrain • Indonesia • London • Jordan • Egypt
• Kuwait • South Africa • New York • Nigeria • Thailand
• Oman • Kenya • Nairobi • Botswana • Japan
• Qatar • Zimbabwe • Geneva • Malawi • Gaberone
• Saudi Arabia • Tanzania • Phillippines • Mauritius • Harare
• Lusaka • Canada • Scandinavia • China • Cote D’Voire
• Taiwan • Vietnam • U.S.A. • Uganda • Turkey