STG Completes Acquisition of 32.6% Stake in Dubai Mercantile Exchange

Saudi Tadawul Group (STG) has announced that it has signed a sale and purchase agreement to acquire a 32.6% stake in Dubai Mercantile Exchange (DME) for $28.5 million. The acquisition was first agreed in January this year under the same terms, and gives STG the option to buy more shares in the future.

The completion of the acquisition follows receipt of all regulatory approvals, including the Dubai Financial Services Authority (DFSA), as well as the satisfaction of other customary commercial conditions.

DME, the premier international energy futures exchange in the Middle East, said that further to the announcement made on 18 January 2024 with respect to a binding agreement to acquire a 32.6% strategic stake in DME Holdings Limited, STG Holding Company, a leading diversified capital markets group in the MENA region, has completed the acquisition in DME Holdings Limited, one of the leading international commodities exchanges. 

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

The agreement 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. Consequently, DME will be rebranded by STG as the Gulf Mercantile Exchange (GME).

The investment from STG represents a significant opportunity to leverage world-class capabilities and expertise, accelerating GME’s growth as a regional commodities leader that is well-positioned to capture global commodity demand.

It will support a strategic move towards leveraging the Middle East’s geographic proximity to both key commodity production hubs and end-markets, with GME serving as a bridge between production and end-markets, DME said in a statement.

“Furthermore, the partnership will enable GME 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,” DME added.

Global Significance

The rebranding of DME as the GME is meant to emphasise the exchange’s regional and global significance. GME will continue to operate out of the Dubai International Finance Centre (DIFC) and be regulated by the DFSA. CME Group will continue to provide the exchange’s technology and clearing services.

The agreement also said that no changes will occur to any aspect of DME Oman contract and that 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 to maintain neutrality and price discovery.

DME hosts the DME Oman contract, the world’s largest physically delivered crude oil generator. This contract ranks as the third most important global benchmark for crude oil and is used by five national oil companies in GCC countries.