Will DIFX become a regional technology bourse?

The birth of the first new stock market this century, the Dubai International Financial Exchange, has left many observers wondering exactly who is going to list their shares on this exchange.

Day One gave few clues with the launch of five index-tracking securities from Deutsche Bank. But a presentation from Investcom, a Lebanese-run investment company for the telecommunications sector, perhaps showed the way forward.

Investcom is to jointly list its shares in London and Dubai after a $750 million IPO early next month, and will become the first stock listed on the DIFX.

Regional liquidity

The attraction to global companies of listing on the DIFX is simple: they are nearer to the massive liquidity of the Oil States. Saudi Arabia, for example, will have an estimated current account surplus of $75 billion this year.

This money has to go somewhere, and the DIFX provides an investment channel located in the Middle East, and uniquely for this part of the world, regulated to international standards, with international rules for IPOs and secondary listings.

The first exchange members are HSBC, Deutsche Bank, UBS and Credit Suisse, who have not joined because they want to trade in tracker funds. The big money will be in the IPOs and the DIFX already plans 10-15 over the next 12 months.

That these IPOs may well be concentrated in the IT and telecoms sector is very likely. Dubai has made itself a regional hub for this industry with its technology and media free zone and Gitex computer show.

Indeed, I-mate founder Jim Morrison - whose $500 million handheld computer-and- mobile phone group floated a 20% stake in London last week, told reporters in Dubai yesterday that I-Mate intends to seek a dual listing in Dubai.

Expect to see a long queue of would-be technology IPOs forming at the doors of the investment banks. Rapidly growing technology companies need equity to expand and develop their services, and investors will always be happy to buy shares in what they hope will be the next Microsoft.

In the process the DIFX will be supporting and developing the technology and media sector in the Arab world, and directing funds into the hands of those entrepreneurs who hopefully know how to invest it best.