Saudi Tadawul Group (STG) is acquiring a 32.6 percent stake in Dubai Mercantile Exchange (DME), one of the leading international commodities exchanges in the world.
Following the binding agreement with existing shareholders of DME Holdings Limited, Saudi Tadawul Group will become the joint largest shareholder in DME Holdings Limited alongside CME Group. Other shareholders in the company include Oman Investment Authority and Dubai Holding.
Following the acquisition, DME will be rebranded as the Gulf Mercantile Exchange to reflect its position as the key regional commodities exchange in the Middle East with global relevance.
The shares acquired are a mix of new and existing shares. Proceeds from the new shares will be used to fund DME’s growth.
Founded in 2007, DME is home to the DME Oman Crude Oil Futures Contract (DME Oman) that generates the world’s largest amount of physically delivered crude oil. The DME Oman contract is the third-most important crude oil benchmark globally, used by five national oil companies based in the Gulf Cooperation Council (GCC) countries.
Ahmad Sharaf, Chairman of DME Holdings Limited, commented: “On behalf of DME Holdings Limited, I am delighted to welcome Saudi Tadawul Group as the joint largest shareholder. In particular, I am proud that Saudi Tadawul Group has chosen to enter the global commodities market through its investment in DME Holdings Limited and this reflects both Dubai Mercantile Exchange’s established position as one of the world’s leading energy-focused commodities exchanges and the opportunities for growth open to Dubai Mercantile Exchange.
“As we enter a new era of growth as the Gulf Mercantile Exchange, we are excited about the potential to build a regional commodities powerhouse with global relevance. Not only will our expanded partnership support our flagship Oman Crude Oil Contract but it will also position us to become a champion for the transition to a more sustainable future.”
Ensuring the integrity of the DME Oman contract has been particularly important to all parties involved. As such, it was agreed that no changes to any aspects of the DME Oman contract would result from the transaction. In addition, to avoid conflict of interest and safeguard the twin imperatives of neutrality and price discovery, no Saudi Arabian crude oil contract will be traded, sold, or bought on, nor will Saudi crude be delivered against, the DME Oman contract via DME.
Khalid Al Hussan, Group CEO of Saudi Tadawul Group, added: “Our investment in DME Holdings Limited provides Saudi Tadawul Group with access to one of the most important asset classes globally for the first time, embedding commodities trading into the Middle East’s largest capital markets group.
“With the option to increase our stake in the future, this investment will contribute to our ability to diversify the Group’s revenues and opportunities and is firmly aligned with our growth strategy and ambitions as part of Vision 2030.”
Saudi Tadawul Group’s portfolio
Founded in 2021, Saudi Tadawul Group is a holding company with a portfolio of four integrated subsidiaries: the Saudi Exchange, one of the 10 largest stock exchanges in the world by market capitalisation, the Securities Clearing Center Company (Muqassa), the Securities Depository Center Company (Edaa), and Wamid, an innovative applied technology services business.
The partnership will enable the new Gulf Mercantile Exchange to capture demand for energy, metals, and agricultural commodity markets and support the ongoing global transition to a sustainable economy through the launch of new derivatives contracts.
Derek Sammann, Senior Managing Director, Global Head of Commodities, Options and International Markets, CME Group, added: “We look forward to welcoming Saudi Tadawul Group as a significant partner in the new Gulf Mercantile Exchange. Building on DME’s successful benchmark Omani Crude Oil futures contract, Saudi Tadawul Group’s participation in the exchange will unlock new opportunities for developing regionally relevant trading products to help global market participants gain exposure or manage energy, metals or agriculture price risk.”
The transaction is subject to closing conditions, including regulatory approvals. DME will continue to operate as usual from its headquarters in Dubai International Financial Centre (DIFC) and will remain regulated by the Dubai Financial Services Authority. CME Group will continue to provide its industry-leading CME Globex trading technology and clearing services to Gulf Mercantile Exchange.
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