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Saudi Tadawul acquires 32.6% stake in DME

20 Jan 2024 By OUR CORRESPONDENT

Muscat – Saudi Tadawul Group Holding Company (STG), a leading diversified capital markets group in the MENA region, has entered into a binding agreement with existing shareholders of DME Holdings Limited to acquire a 32.6% stake in Dubai Mercantile Exchange (DME), one of the leading international commodities exchanges.

As a result, STG will become the joint largest shareholder in DME Holdings alongside CME Group, with other shareholders including the Oman Investment Authority (OIA) and Dubai Holding as well as global financial and commercial industry leaders.

The deal also includes an ability for STG to increase its shareholding in the future. The shares acquired represent a mix of new and existing shares, with the proceeds from the new shares used to fund DME’s growth.

The agreement will support a strategic move towards leveraging the Middle East’s geographic proximity to both key commodity production hubs and end-markets, with DME serving as a bridge between production and end-markets. 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 through the launch of next-generation derivatives contracts as part of the transition to a sustainable economy.

DME Oman

Dubai Mercantile Exchange is home to the DME Oman Crude Oil Futures Contract (DME Oman), that generates the world’s largest amount of physically delivered crude oil. The DME Oman contract serves as the third-most important crude oil benchmark globally, which is used by five national oil companies based in the GCC countries.

Under the terms of the agreement, ensuring the integrity of the DME Oman contract has been of particular importance to all parties. As such, it has been agreed that no changes to any aspects of the DME Oman contract will result from the transaction contemplated by the agreement. In addition, to avoid conflict of interest and safeguard the twin imperatives of neutrality and price discovery, no Saudi Arabian crude oil contract will be traded, sold or bought on, or indexed to, nor will Saudi crude be delivered against, the DME Oman contract via DME.

CME Group will continue to provide its industry-leading CME Globex trading technology and clearing services to the Gulf Mercantile Exchange. The CFTC’s role in overseeing CME Clearing’s operations to protect the integrity of transactions executed on the DME and mitigating risk to traders will remain unchanged.

Ahmad Sharaf, chairman of DME Holdings Limited, said, “On behalf of DME Holdings and its shareholders, I am delighted to welcome Saudi Tadawul Group as joint largest shareholder. As we enter a new era of growth as the Gulf Mercantile Exchange, we are excited about the potential to build a regional commodities powerhouse with global relevance. Not only will our expanded partnership support our flagship Oman Crude Oil Contract but it will also position us to become a champion for the transition to a more sustainable future.”

Mulham al Jarf, Deputy President for Investments at Oman Investment Authority, said, “We are delighted to welcome Saudi Tadawul Group as a new shareholder. Its expertise and insights, along with what we have built over the years with DME Holdings in Dubai Mercantile Exchange, will be invaluable as we continue to navigate through an ever-evolving market landscape. This partnership marks a significant step in our commitment to innovation and excellence in providing opportunities for DME’s regional and global stakeholders while maintaining the integrity of DME Oman.”

Eng Khalid al Hussan, Group CEO of Saudi Tadawul Group, said, “Our investment in DME Holdings provides STG 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. We look forward to working together to unlock new growth opportunities, leveraging our proximity to key financial and production hubs to bridge demand from east and west.”

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