Sale of UAE Exchange Highlights Weakness of IPO Market

UAE Exchange, one of the world’s largest networks of currency exchanges, with 29 branches, has sold a 40 percent stake to Centurion Investment of Abu Dhabi. The sale,  reported to have been for $2billion, took place after the UAE Exchange had abandoned plans for an IPO. The proceeds from the sale are for expansion purposes.

The market for IPO’s on the Emirates’ stock exchanges has collapsed since the economic crisis of 2008. Almost half of the UAE’s brokers went out of business in 2011 and major banks have closed their brokerage arms in the UAE. The Dubai Financial Market General Index has fallen 77 percent from its pre-crisis peak in 2008. For that reason, the valuation of companies, even those with sound fundamentals, is still significantly below expectations.

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