--CME's Nymex division to up stake to 50% post DME
recapitalization
--Oman Investment Fund to increase its holding to 29%
--A Dubai Holding subsidiary's stake will drop to 9% from
25%
--DME recapitalization to help growth plans
By Nikhil Lohade and Tim Falconer
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--CME Group Inc. (CME) will double its
stake in the Dubai Mercantile Exchange in a recapitalization plan,
as the U.S.-based exchange operator looks to consolidate its global
footprint.
The CME Group's Nymex division will boost its stake in the
Dubai-based commodities bourse to 50%, from 25%, for an undisclosed
amount in a restructuring of the DME's equity shareholding,
according to a joint emailed statement Tuesday.
CME's move comes at a time when major exchange groups are seen
pursuing smaller deals, after a host of mega-merger plans collapsed
over the past year due to regulatory and nationalistic
barriers.
The world's largest futures exchange operator by trading volume
reportedly tabled a bid to acquire the 135-year-old London Metal
Exchange, which dominates global trade in non-ferrous metals.
CME's strong interest in the Dubai-based commodities bourse
comes amid a period of steady growth in trading volumes for the DME
since launching in 2007. Its flagship Oman crude futures contract,
which is increasingly being used as a benchmark for Middle Eastern
crude oil exports to Asia, is also among the largest physically
delivered crude oil futures contracts in the world.
The DME said in 2011 it delivered more than 145 million barrels
of crude oil, a 19% trading volume growth from the year
earlier.
"The deepening of our relationship with DME further serves our
strategy of providing risk managers and investors with access to
key benchmark products via our global distribution networks," Bryan
Durkin, CME Group's chief operating officer and managing director,
products and services, said in the statement.
DME's recapitalization will also see Oman Investment Fund
increase its holding to 29% from 25% in the exchange, while
diluting an investment company linked to the emirate's ruler. A
Dubai Holding unit's stake will drop to 9% from 25%.
The balance of 12% will be held on a non-voting basis by
strategic investors that include Vitol, Shell, JP Morgan, Morgan
Stanley, Goldman Sachs and Concord Energy, Tuesday's statement
said.
This recapitalization positions the DME to enter the next phase
of development for existing and future customers seeking to manage
price risk for crude oil markets East of Suez, according to the DME
Chairman Ahmad Sharaf.
DME is regulated by the Dubai Financial Services Authority and
all trades executed on the exchange are cleared by CME Group's
Nymex, which is regulated by the U.S. Commodity Futures Trading
Commission.
-By Nikhil Lohade and Tim Falconer, Dow Jones Newswires, +9714
446 1694, nikhil.lohade@dowjones.com
Copyright (c) 2012 Dow Jones & Co.