Dubai Ports World, the state-owned port operator, has shelved plans for a London flotation in what would have been the largest public offering from the Middle East after deciding it would be cheaper to issue debt.
DP World announced plans for the flotation in 2005. It hoped to raise as much as $5billon (£2.5 billion) on the London Stock Exchange last year, but last November postponed the offering for another six to 12 months to give itself more time to prepare.
Sultan Ahmed Bin Sulayeam, the chairman of Dubai World, the parent of Dubai Ports, said in a statement today: “We’re not convinced an IPO is the cheapest way to raise money so far.”
He added: “We evaluate what is the most efficient way of financing and if we prove that listing part of it will be cheaper, then we’ll do it. So far, we’ve proven that issuing bonds is better for us.”
But Merrill Lynch and Deutsche Bank are still exploring options for DP World and it is understood a float is still a possibilty.
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Investors bought a $3.5bn convertible Islamic sukuk bond issued from DP World’s holding company Dubai World last year which is convertible into shares in the event of any flotation. Analysts say many investors bought the bonds in expectation of a flotation this year.
DP World reportedly intended to raise more than £1 billion by selling a 20 per cent stake in itself.