Abu Dhabi: With Damac Properties recently announcing that is set to list its shares on the Dubai Financial Market (DFM), analysts expected more UAE-based companies listed on the London Stock Exchange (LSE) to make the move towards dual listing.

According to analysts, the success of Damac in dual listing should encourage more UAE-based companies listed abroad to do the same.

With 41 companies from the Middle East and North Africa currently listed on the LSE, analysts and business executives cited London’s lack of constraints as one of the main reasons for listing there.

“In the UAE, you need a free float of at least nearly 49 per cent of the capital, which is not the case in London. Regarding the methodology of the pricing, [in the UAE] it has to be done at par, and in London you can use something called a book-building process in order to have a fair price done by the market not at book value,” said Sebastien Henin, head of asset management at The National Investor.

As for the outlook for the UAE’s bourses, Henin said he expected the regulator to make changes to facilitate listing.

“We have seen recently a positive sign with Emaar, which was thinking of listing in London and then they got an exception from the stock exchange and the regulator to help them list in Dubai. So I think, there’s the knowledge that there’s a problem, and going forward, I’m pretty sure they’re going to try to better accommodate companies to make sure that the blue chips are listed in the UAE,” he said.

Higher liquidity

Meanwhile, Dr B.R. Shetty, chief executive officer at NMC Healthcare, which is listed on the LSE, attributed the choice to list outside UAE to the higher liquidity available in London, as well as a greater number of investors.

Asked if he would consider dual listing in the UAE, Shetty told Gulf News, “We’re doing extremely well in London, and a lot of investment has poured in, so I don’t need to dilute it just to continue. It’s not that I’m not supporting the UAE, but I don’t want to dual-list.”

Dr Sami Alom, chief strategy officer at Al Noor Hospital Group, agreed, adding that the LSE provides better corporate governance. Discussing the decision to list Al Noor in London, Alom said the group did consider a local option initially, but then decided to list abroad.

While there are no plans for dual listing at the moment, Alom said the group might re-consider should there be a need to raise more capital.

Governance standards

Other UAE-based companies listed on LSE include Gulf Marine Services, an oil service vessel operator. While CEO Duncan Anderson did not rule out the option of dual listing, he said there were no plans to do so.

According to the eighth annual report of the Mena Private Equity Association, the risk from the lack of governance standards in emerging and frontier markets is a factor in deterring potential investors — both local and international.

“The Mena region, with all of its challenges, remains a very appealing market for investing growth capital. Its rapid and continuous development with little to no leveraging makes it an attractive investment destination. However, the lack of transparency and weak protection of shareholder rights is not encouraging foreign direct investment,” Yasser Akkaoui, chairman at Capital Concept, wrote in the report.