Abu Dhabi and Dubai exchanges hire advisers for possible merger

PLANS for a merger between Abu Dhabi’s and Dubai’s main stock exchanges gained momentum yesterday, after it emerged that both parties have hired banks to advise on a possible deal.

Merging the Dubai Financial Market and the Abu Dhabi Securities Exchange would be one of the biggest reforms in the country’s financial industry in recent years.

It would make it easier for investors to operate across the markets and could stimulate trade and attract more foreign investment.

Abu Dhabi has hired JP Morgan and local lender First Gulf Bank to advise on the merger, sources familiar with the plan said.

Investment Corporation of Dubai, the flagship holding company which owns stakes in many of Dubai’s top entities, including DFM’s parent, Borse Dubai, has hired Citigroup to advise on the matter, according to the sources.

Shares in DFM, the only listed bourse operator in the Gulf region, surged 15 per cent to the daily limit reaching the highest level since November 2009.

Merger talks have occurred on and off since at least 2010, but they have been hindered by differences over valuations and Dubai’s 2009-2010 corporate debt crisis.

Three of the sources said the governments aimed to reach an agreement on the merger by the end of this year.

DFM, Borse Dubai, the Abu Dhabi Securities Exchange and First Gulf Bank were not immediately available for comment.

JP Morgan and Citigroup declined to comment.