Saudi Tadawul Group (Tadawul) has agreed to purchase a 32.6 percent stake in Dubai Mercantile Exchange (DME) for $28.5M (SAR 107M), becoming the joint largest shareholder alongside US-based CME Group.
In the agreement, DME will be rebranded as the Gulf Mercantile Exchange, expanding its focus to energy, metals, and agricultural products. Tadawul also has the option to take majority control of the exchange after four years.
Khalid Al Hussan, group CEO of Saudi Tadawul Group, stated, “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.”
Acquisition Fuels Growth for Dubai Mercantile Exchange
The acquired shares include a combination of new and existing shares, with the proceeds from the new shares intended to fund DME’s growth.
Following the deal’s closure, DME will continue its operations from its headquarters in the Dubai International Financial Centre, remaining regulated by the Dubai Financial Services Authority.
CME Group will retain its role, providing CME Globex trading technology and clearing services to the Gulf Mercantile Exchange, according to Gulf Business.
Tadawul clarified that no Saudi Arabian crude oil contracts will be traded, sold, or bought on, or indexed to, the DME’s Oman contract to avoid a conflict of interest.
This investment represents an opportunity to accelerate DME’s growth as a regional commodities leader with global demand, aligned with the ongoing transition to a sustainable economy.
Established in 2007, DME lists the Oman crude oil futures contract, serving as a Middle East benchmark used by the region’s national oil companies for export pricing formulas.
Tadawul, converted into a holding company ahead of its 2021 initial public offering (IPO), raised $1B in the IPO, marking the biggest exchange IPO since Euronext’s public offering in 2014. The Riyadh-based firm’s portfolio includes subsidiaries Saudi Exchange, Muqassa, Edaa, and the innovation unit Wamid.
