Page 257 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

Capable Capital: The GCC as a Source of Capital 239

TABLE 8.4
DIFX: A Different Kind of Exchange

Attribute “Onshore” Exchanges DIFX

Foreign ownership Variable, can be as high None
restrictions as 100%
Minimum public Tends to be 40% or 25%
flotation higher
Offering price Negotiated with regulator Through institutional
investor-driven process
Corporate form Mandated Flexible

The central importance of GCC investors in global capital mar-
kets is a reality likely to persist for years to come. Savvy firms will
acknowledge this reality and develop financial strategies that ben-
efit from the participation of Gulf investors and optimize value cre-
ation for the global parent company.

KEY LESSONS

● The GCC economies have long been exporters of dollar-
denominated capital and are significant investors in global
capital markets.
● Wealth in the region is fueled by large government surpluses,
which may face greater pressure over the years as energy
prices normalize and budgetary pressures rise.
● The boom of the 2000s has seen investment strategies that
vary significantly from those of previous booms, though the
bulk of GCC capital is still invested outside the region.
● GCC stock markets experienced a boom and steep correction
in the 2000s, as valuations reached levels far out of line
with global norms.
● The growth of Islamic finance is an important trend in the
region and should be understood by multinationals.
● Savvy multinationals should integrate the region into their
capital strategies, sourcing funds from the Gulf and even
consider financing local subsidiaries from within.