By Murray Coleman
Financial heavyweights in the U.S. are joining several other global energy giants to help jump-start the Dubai Mercantile Exchange.
Those taking part include Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) along with Royal Dutch Shell (NYSE:RDS.A) in Europe, the exchange said, in announcing that its board has approved a minority stake by the group of outside investors.
The DME also said that a minority ownership interest of up to 20% would be permitted. But authorities at the DME didn't say in their statements whether the first deal would be the last.
The DME was established as a joint venture between the New York Mercantile Exchange, Tatweer (a member of Dubai Holding), and the Oman Investment Fund last year. That type of business competes with similar contracts traded on the IntercontinentalExchange (NYSE:ICE) in the U.S., according to a report in the Associated Press about the deal.
Terms of the DME’s new shareholding structure were not disclosed. Other members will include Vitol, Concord Energy and Casa Energy Trading.
“The strategic partnership with the Dubai Mercantile Exchange is consistent with our commitment to the region," said Vic Simone, a managing director at Goldman Sachs, in a statement.
Morgan Stanley Commodities noted it will leverage its experience providing risk management services for customers around the world with in-depth research into global commodities markets. Morgan Stanley's Georges Makhoul said that the DME "not only offers strong potential from an investment perspective, but also constitutes a strategic partnership that will develop our footprint in the Middle East.”
Goran Trapp, another Morgan Stanley commodities official, added:
“A successful and liquid futures exchange linked to energy products in the region will help us to better manage some of the risks inherent in our own business and those of our clients. We believe that the ongoing economic growth and development in Dubai and wider GCC region will continue to drive the success of the DME, delivering return on investment as well as enhanced opportunities for our global client base.”