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Goldman heads group taking 20pc Dubai stake

Goldman heads group taking 20pc Dubai stake

By James Quinn, Wall Street Correspondent

Last Updated: 10:25pm BST 11/08/2008



Six financial institutions led by Goldman Sachs and a division of Royal Dutch Shell have taken a 20pc equity stake in the Dubai Mercantile Exchange (DME).

The investors, which also include Morgan Stanley, have invested in the commodities exchange as increasing amounts of international capital are drawn into the region.

The external investments are the first in the exchange since it was set up as a joint venture between the Gulf state’s ruling family, Nymex Holdings, the parent company of the New York Mercantile Exchange, and the Oman Investment Fund. They will now hold 25pc.

The three other new investors that will share the 20pc stake are Vitol Group, Casa Energy Trading and Concord Energy, while floor traders will hold the remaining 5pc.

DME chairman Ahmad Sharaf said the six institutions “picked up part of the 20pc stake in DME”, but would not reveal the price paid by each institution or the overall amount.

“We now have the benefit of experienced traders to help develop new contracts. It is a vote of confidence in the exchange,” he said.

The DME lists the Oman crude oil futures contract – seen as a benchmark for the pricing of Middle East sour crude oil. It also offers trading in the Brent futures contract, but trading across the board has been light, which is one of the reasons it has sought outside investors.

The investment by Goldman and Morgan Stanley is no surprise given their strength in energy trading, while the others are all oil companies or traders.

“The Dubai Mercantile Exchange not only offers strong potential from an investment perspective but also constitutes a strategic partnership that will develop our footprint in the Middle East,” said Georges Makhoul, head of Morgan Stanley in the Middle East and North Africa.

Cross-holdings between Dubai and the West include DIFC Investments’ $1.8bn capital injection into Deutsche Bank in May.

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