The Hindu Business Line : Dubai exchange beckons Indian corporates

OVER subscriptions to public issues of capital are not incredible. But over subscriptions of 800 times? And Dubai was witness to precisely such an event when early this year, an investment company managed to raise $18 billion in subscription for its $135-million issue programme.

There is tremendous liquidity in the system and Dubai is hoping to attract some Indian companies to raise monies and get their shares listed in that market. Come September, a new stock exchange — Dubai International Financial Exchange (Difx) — would throw its doors open for overseas corporates.

"Indian companies can tap into the immense surplus liquidity in Dubai through Difx. The increased visibility, by way of Difx listing, would allow Indian companies to reach a set of investors who have historically not invested in Indian market through the FII route," said Mr Sanjay Aggarwal, Indian Subcontinent Manager, Corporate Finance, Difx, talking to Business Line from Dubai.

The secondary market in Dubai is trading at a P/E multiple of almost 45 — clearly a case of surplus liquidity chasing limited quality paper. Mr Amar Chintopanth, Chief Finacial Officer, 3i Infotech, said, "There is no doubt that West Asia is sitting on huge cash surplus. It makes more sense for Indian companies to tap this rather than go to the Far East or Europe," he said.

Apparently, many Indian corporates have been making trips to the emerging international financial hub to raise funds. "We are keen to seize this chance as our company has exposure in oil and gas. The plan is to raise over $50 million and this would be the first time the company raises funds abroad. The dialogue with Difx is going on," said Mr D. Datar, Vice-President, Corporate Affairs, Man Industries (India) Ltd.

While it is early days yet, the Indian companies surely would be looking at more than listing activities at Difx unlike at Luxembourg or London.

"It makes sense and many Indian companies would look at listing on Difx. After talking to investors and bankers in Dubai, there is no doubt that they are keen to tap investment opportunities outside the region," said Mr Jayesh Doshi, Vice-President, Treasury, Gujarat Ambuja.

It is not that the Indian capital market is inactive by any stretch of imagination.

"The Indian market too has the capability to bring out more IPOs. That does not mean one should ignore an alternative market. Dubai is such a market. We are working on it," said Mr Jagdish Master, Director, Enam Securities.

The interest in Dubai for Indian paper may eventually boil down to the sector play of the Indian companies, feels Mr J. Niranjan, Joint Head - Investment Banking, M&A Advisory, ICICI Securities.

"Thus, investors in Dubai may feel more enthused about companies in construction, oil and gas, cement and may be shipping than other sectors. From the Indian perspective, it would provide a pool of money otherwise inaccessible".

Whether Difx gets to become another Luxembourg as a stock exchange that meets the listing requirements to circumvent the lock-in norm of SEBI or it grows into a trading exchange for Indian companies remains to be seen. Surely, Difx would wish it were the latter.

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