Top financial and energy trading firms to take equity stakes in Dubai mercantile exchange
The Dubai Mercantile Exchange Limited (DME) today announced that it has concluded the sale of equity stakes in the Exchange to a number of leading global financial institutions and energy trading firms, following approval from the DME’s Board of Directors for the release of an indirect equity stake of up to 20% in the Exchange.
Established as a joint venture between the New York Mercantile Exchange, Inc., Tatweer, a member of Dubai Holding, and the Oman Investment Fund, the DME’s new shareholding structure will include Goldman Sachs, Morgan Stanley, Vitol, Concord Energy, Casa Energy Trading, and a Shell company. The terms of the equity participation between the parties remain private and confidential. Vinson & Elkins LLP acted as legal advisors to the DME on the transaction.
Commenting on the announcement, Ahmad Sharaf, Chairman of the DME, said: “We are delighted to welcome our new stakeholders into the DME. They rank among the world’s most successful and sophisticated financial institutions and energy trading firms and their vote of confidence in the Exchange is indicative of the success the DME has achieved to date, as well as the strategic positioning of Dubai as a financial hub bridging the time zones of Europe, Asia and the United States.”
Gary King, Chief Executive Officer of the DME, added: “The addition of our new partners into the Exchange marks yet another milestone in the development of the DME. The desire of these institutions – which form an important part of the financial and energy trading community – to join the Exchange as equity holders and strategic partners highlights the remarkable progress made by the DME to date in establishing an internationally recognised futures exchange.”
Vic Simone, a Managing Director at Goldman Sachs, commented: “The strategic partnership with the Dubai Mercantile Exchange is consistent with our commitment to the region."
Morgan Stanley Commodities has more than 25 years of experience providing risk management services for customers around the world, coupled with in-depth research and insight in to global commodities markets. Georges Makhoul, President of Morgan Stanley MENA, commented: “The Dubai Mercantile Exchange not only offers strong potential from an investment perspective, but also constitutes a strategic partnership that will develop our footprint in the Middle East.”
Goran Trapp, Morgan Stanley’s Head of Commodities for EMEA, added: “A successful and liquid futures exchange linked to energy products in the region will help us to better manage some of the risks inherent in our own business and those of our clients. We believe that the ongoing economic growth and development in Dubai and wider GCC region will continue to drive the success of the DME, delivering return on investment as well as enhanced opportunities for our global client base.”
Tony Harpur, Director, Vitol Dubai, commented: "Vitol has been involved with the DME since its inception and we are delighted to have the opportunity to make a further commitment to the Exchange by means of this equity purchase. We have always held the view that the region needs a new price discovery mechanism for Middle East crude oil destined for the Eastern markets. We believe that a regionally based futures exchange is the optimum way for the market to determine the value of Middle East sour crude in a transparent and reliable way. We remain confident that DME Oman prices can be used by other producers as well as Oman and Dubai to price their crude and also that the DME contracts will become a very useful and powerful hedging tool for traders and refiners. We congratulate the DME and its founder shareholders on their progress to date and looking forward to supporting and sharing in their further success in the future."
The DME currently lists its flagship DME Oman Crude Oil Future Contract, the only physically delivered Middle East sour crude oil futures contract, which is increasingly seen as a global benchmark for the pricing of Middle East sour crude oil. In addition, the Exchange recently launched its DME Brent Crude Oil Financial Contract and the DME Oman Crude Oil Financial Contract. To date, more than 400 million barrels of crude oil have been traded on the Exchange, a figure that continues to grow in line with strong interest, demand and growing participation on the DME.