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Sun 10 Feb 2008 04:00 AM

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On the verge of an IPO frenzy?

While 2008 looks set to suffer short-term market volatility, the DIFX appears to have reason for long-term optimism.

In December, we suggested that 2008 would be a defining year for the Dubai International Financial Centre and the Dubai International Financial Exchange (DIFX).

Struggling to attract institutional investors and with just one company listed exclusively in Dubai - DP World - the exchange was crying out for a little international class.

It hasn't taken long. Within the next few days, New York-based Nanodynamics (ND) will become the first US Company to list on the DIFX.

Daman Investments and its US strategic partner Global Crown Capital are acting as co-lead managers on the offering, and last week they revealed that the IPO should raise a cool US$100m, with the stake split down the middle between major US institutional investors, and regional Middle East institutions and accredited investors.

"It is the first time that major US institutions will be participating on the DIFX, and it's very exciting," Rani Jarkas, managing partner and CIO at Global Crown Capital, told Arabian Business.

Coverage in the US has been very positive: people understand that institutions want to make money, and if it's beneficial for the company and beneficial for the shareholders, then the company has to do the right thing for its shareholders.

Incidentally, another positive spin-off of the offering is that the company in question is one with impeccable green credentials.

ND is a global alternative energy and clean technology company developing solutions to some of the world's most urgent challenges in the energy, environment, water and infrastructure markets.

Not only will ‘NDMX' look good on a ticker, a blossoming ‘green business' is the must-have accessory for any self-regarding stock market in 2008.

Yet while bringing ND to the verge of a DIFX IPO is no mean achievement, only after the listing will things begin to get really interesting.

As the US economy slides alarmingly towards recession, its major institutional investors will view ND as a test case upon which the health of the entire GCC's markets might be judged.

With China, India and the GCC all looking safe bets for a spot of geographic risk diversification, what price a slew of similar listings over the coming months?

The Group CEO of Daman, Shehab Gargash, is keeping his cards close to his chest, although he admits that there are a few more listings in the pipeline.

As well as US interest in cementing the acceptance of DIFX as an internationally recognised platform, there is also the prospect of a number of two-year-old companies from within the region taking the IPO route. Regulators have ensured that firms waited this long, and the enforced period of IPO abstinence means that these local companies will bring significant momentum to the market.

While 2008 will no doubt be a rollercoaster ride in terms of short-term market volatility, it looks as though the DIFX has every reason for long-term optimism.

Arabian Business: why we're going behind a paywall

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