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Borse Dubai exits London Stock Exchange

Entire stake sold in $2.2b deal; QIA now largest LSE stakeholder

The London Stock exchange, one of the world’s largest exchange operators, lost one of its main shareholders of the past decade.

Dubai: Borse Dubai, the holding company of Dubai’s two stock exchanges, said on Thursday it sold its entire stake in the London Stock Exchange, or LSE.

“Borse Dubai has [on Thursday] sold its shareholding in London Stock Exchange Group, representing approximately 17.4 per cent of the share capital in the company,” said a brief statement issued by the Dubai company, which was the biggest single shareholder in the LSE.

Bank of America Merrill Lynch, Barclays Bank and Nomura International managed the deal that was potentially worth about $2.2 billion based on Wednesday’s closing price for LSE shares.

Borse Dubai, a holding company owned by the emirate’s wealth fund, had purchased a 28 per cent LSE stake for $21 per share in 2007 as part of a complex, wider deal with US bourse operator Nasdaq.

The company’s portfolio of assets includes stakes in the Dubai Financial Market and Nasdaq Dubai exchanges and a 17 per cent stake in Nasdaq.

In a separate statement, the Dubai group ruled out any sale of its shares in the Nasdaq OMX Group.

The LSE, one of the world’s largest exchange operators, loses one of its main shareholders of the past decade. It declined to comment on Wednesday on Borse Dubai’s plan to sell its LSE stake.

Following the stake sale announcement, the LSE plunged to 2,288 pence, down 9.85 per cent on London’s benchmark FTSE 100 index, which fell 1.15 per cent to 6,910.79 points overall in morning deals.

With the exit of Borse Dubai, the Qatar Investment Authority, or QIA, takes over as the biggest LSE shareholder. The QIA cut its holding to about 10 per cent from 15 per cent last year.

Borse Dubai sold its LSE stake as the share price was at an all-time high and it was the “appropriate time to monetise” its investment, according to a Borse Dubai spokesman. The proceeds from the stake sale would be used for general business purposes, he added.

Borse Dubai previously sold a chunk of its LSE stake in September 2014, representing around 3.1 per cent of the company’s issued capital.

The LSE said it had “grown, strengthened and diversified significantly” since Borse Dubai took its stake and thanked the exchange for “their long term exemplary support as a shareholder during that period”.

Analysts said Borse Dubai has taken advantage of a near-record LSE share price, which has jumped almost 30 per cent over the past 12 months. Borse Dubai, which is 90 per cent owned by Dubai’s state holding company, is crystallising its investment and hopes to net about $900 million, according to analysts.. The Middle East bourse, together with the QIA, took large minority stakes in the UK exchange in 2007 as part of a complex deal that also saw Borse Dubai take a large stake in Nasdaq.

Both shareholders have been selling down their holdings over the past nine months. Borse Dubai sold a 3.1 per cent in the LSE in September.

issacjohn@khaleejtimes.com