Saudi Tadawul Group acquires 32.6% stake in Dubai Mercantile Exchange

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Saudi Tadawul Group (Tadawul) has agreed to acquire a 32.6 per cent stake in Dubai Mercantile Exchange (DME) for $28.5m (SAR107m), making the stock exchange operator the joint largest shareholder along with US-based CME Group.

Under the deal, the DME will be rebranded the Gulf Mercantile Exchange and will expand in energy, metals and agricultural products. The Tadawul also has the option to take majority control of the exchange after four years.

“Our investment in DME Holdings Limited provides Saudi Tadawul Group with access to one of the most important asset classes globally for the first time, embedding commodities trading into the Middle East’s largest capital markets group,” said Khalid Al Hussan, group CEO of Saudi Tadawul Group.

“With the option to increase our stake in the future, this investment will contribute to our ability to diversify the group’s revenues and opportunities.”

The shares acquired represent a mix of new and existing shares, with the proceeds from the new shares used to fund DME’s growth.

Following the closing of the deal, DME will continue to operate from its headquarters in the Dubai International Financial Centre and will remain regulated by the Dubai Financial Services Authority, Tadawul said in a statement.

Similarly, CME Group will continue to provide its industry-leading CME Globex trading technology and clearing services to Gulf Mercantile Exchange.

The Saudi bourse owner and operator said “No Saudi Arabian crude oil contract will be traded, sold or bought on, or indexed to, nor will Saudi crude be delivered against” DME’s Oman contract to avoid conflict of interest.

Its investment represents a significant opportunity to leverage world-class capabilities and expertise, accelerating DME’s growth as a regional commodities leader that is well-positioned to capture global commodities demand.

“The partnership will enable the new Gulf Mercantile Exchange to capture demand for energy, metals, and agricultural commodity markets and support the ongoing global transition to a sustainable economy,” the bourse operator said in a statement.

Founded in 2007, DME lists the Oman crude oil futures contract, which is a physically settled contract serving as a Middle East benchmark used by the region’s national oil companies as part of their export pricing formulas.

Saudi Arabia converted Tadawul into a holding company ahead of its initial public offering (IPO) in 2021. The stock market operator surged on its trading debut after it raised $1bn via a public offering, marking the biggest exchange IPO since Euronext went public in 2014.

The Riyadh-based firm’s portfolio consists of four subsidiaries: Saudi Exchange, its stock exchange business unit, the Securities Clearing Center Company (Muqassa), the Securities Depository Center Company (Edaa), and the innovation unit Wamid.

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