By Andrew Torchia
Dubai listed its first new stock in more than four years on Tuesday but the shares drew no trade, underlining the limits of the market's recovery from its 2008 crash.
Bank of London and The Middle East (BLME), Britain's largest standalone Islamic bank, was listed on Nasdaq Dubai, the smaller of the emirate's two stock exchanges.
The bank said its choice of Dubai showed its commitment to expanding its business in the Middle East. Earlier this year, Dubai announced plans to become a top centre for Islamic finance.
But the stock did not trade on its first day, apparently because the size of the share float was modest and investors were not yet familiar with the bank. The Nasdaq Dubai website showed 100,000 shares in BLME offered at $2.20 each, below its price at listing of $2.61, but no takers.
The bank listed 195.7 million existing shares through a holding company, implying a market capitalisation of approximately $510 million.
The previous equity listing on either of Dubai's two stock exchanges was by construction firm Drake & Scull in early 2009. Listings then dried up as the emirate's real estate prices plunged and Dubai faced a corporate debt crisis.
This year, stock prices have recovered dramatically along with the real estate industry and Dubai has been one of the world's best-performing markets; the emirate's main equity index is up 72 percent year-to-date.
In addition to BLME, at least two relatively small companies - a United Arab Emirates-based fast food franchise and the UAE's first real estate investment trust - have been laying plans for initial public offers (IPOs) of shares on Nasdaq Dubai.
But big equity listings, including IPOs on Dubai's main exchange Dubai Financial Market, have not yet resumed. Some fund managers blame awkward listing rules which limit owners' options in structuring share offers.
Also, many of Dubai's blue chips are controlled by the government, which owns large stakes in them. Investors would love to see IPOs from firms such as the fast-growing Emirates airline and Dubai Electricity and Water Authority, but that would depend on a political decision.
BLME, which offers corporate banking and wealth management services, was founded in 2006 with the backing of Kuwaiti investors, including Boubyan Bank which held 21.8 percent of BLME shares as of December 2012.
The British-based bank's chief executive Humphrey Percy told Reuters in May that BLME aimed for 15 percent growth in assets this year. It currently holds over $100 million in assets under management across a range of Islamic funds, including a fixed income fund rated A by Moody's Investors Service.
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