Exclusive - UAE bourses hire advisors as merger gathers steam: sources

Wed Oct 2, 2013 4:08pm EDT
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By Stanley Carvalho and Dinesh Nair

ABU DHABI/DUBAI (Reuters) - Abu Dhabi and Dubai have hired banks to advise on a possible merger of their two main stock exchanges, a state-backed deal that could energize financial markets in the United Arab Emirates, sources familiar with the plan said.

Merging the Dubai Financial Market DFM.DU (DFM) and the Abu Dhabi Securities Exchange (ADX) 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.

Shares in DFM, the only listed bourse operator in the Gulf region, surged 15 percent to the daily limit reaching the highest level since November 2009. Dubai's broader benchmark index .DFMGI reversed earlier losses to close up 2.7 percent on the Reuters report.

Talks on a tie-up between the Dubai Financial Market DFM.DU (DFM) and the Abu Dhabi Securities Exchange (ADX) 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.

With a renewed focus on cooperation between the two emirates in several fields, the idea of a merger of the two bourses has once again gained traction.

Abu Dhabi, the richest emirate in the UAE, has hired U.S. investment bank J.P. Morgan Chase (JPM.N: Quote) and local lender First Gulf Bank FGB.AD to advise on the merger, the sources said, speaking on condition of anonymity as the matter is not public.

One source said Abu Dhabi's mandate came from the Abu Dhabi Executive Council, the top policymaking body in the emirate. The council did not respond to calls and emails seeking comment.   Continued...