Is 2008 the year for the DIFC?

Last month was a pretty exciting one at the Dubai International Financial Centre (DIFC). First came ‘DIFC Week', a celebration of all things Gate-shaped that attracted renowned speakers from all over the world. Backs were slapped, photos were snapped, and encouraging noises were made as everyone had a thoroughly good time.

Yet all the balloons, banners and book signings were just a precursor to the big event, as shares in the Middle East's biggest-ever initial public offering (IPO) were allocated last week. Shares in Dubai Ports World (DP World) rose as much as 10.8% on their trading debut, after the world's fourth-largest container port handler raised almost US$5bn. Here was the big one: a giant listing that saw more than 208 million DP World shares trade hands on the first day alone. Investors offered around US$65bn towards the IPO, and the Dubai International Financial Exchange (DIFX) buzzed with activity.

Cynics might suggest that the excitement has been a long time coming. When the DIFX opened in September 2005, it was trumpeted as the ‘missing link' between the markets of East and West, an Arab London-New York-Hong Kong rendezvous that would firmly establish Dubai as a major financial centre. Jump forward two years, and with the exception of DP World, all of the 12 companies listed on the exchange have shares listed elsewhere. While the exchange has benefited from the UAE economy's extraordinary growth, it hasn't yet set a marker for other Gulf countries to aspire to in terms of listings.

As if to exacerbate matters, even the exchange's prize listing is subject to sniping. Dubai-based Rasmala Investments has filed a letter to the Dubai Financial Services Authority (DFSA), requesting a review of the allocation process behind the DP World IPO.

In a formal letter to the DFSA, Rasmala CEO Ali al-Shihabi has questioned the integrity of the process after his firm placed a US$300m order, but received no shares. DP World has come out strongly against the suggestions - a spokesman said that the company "believes that the allocation process was properly managed and that it was a fair process". Yet whether the DFSA decides to proceed with a review or not, al-Shihabi at least got it right when he said that "If we are going to build a good future for the financial market in the region, these issues must be raised."

It's all about transparency, and even if reviews find there is no case to answer, then at least investors will know that the DIFX is a safe place to venture. Greater transparency will lead to greater international interest in the market, and so bring in the institutional investors that Dubai so badly needs for the DIFX to evolve.

We're already attracting world-class guest speakers, so let's start attracting world-class institutions to market, starting with the Emirates Airline IPO in January. The DIFC must make sure that 2008 is a defining year - after all, the competition from other Gulf states will be fierce.

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