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Dubai: The Qatar Investment Authority (QIA) is trying to increase its stake in the London Stock Exchange, possibly by trying to buy the holding owned by the Dubai Borse, the UK's Independent newspaper reported quoting unnamed Qatari sources.
Borse Dubai sources said on Sunday that the company does not comment on market speculation. Although there has been growing speculation in the investment banking circles that Borse Dubai might swap its stake in LSE for Qatar's stake in Nordic exchange operator OMX, Borse Dubai officials have always insisted that the LSE stake is a long-term strategic investment.
In September, Borse Dubai bought a 28 per cent stake in the LSE as part of a series of complex deals between Nasdaq and Borse Dubai, which paved the way for a joint bid by the Dubai firm and Nasdaq for OMX. Although Qatar failed to acquire Nasdaq's stake in LSE, in a surprise deal involving a few hedge funds and the unofficial support of the LSE management, QIA bought about 20 per cent stake in the London bourse a few hours apart from Borse Dubai's acquisition of LSE stake.
Both groups' stakes have since been diluted, following the LSE's merger with Borsa Italiana. However, they still remain the London exchange's two biggest shareholders. Borse Dubai now holds about 20 per cent and QIA owns close to 15 per cent.
According to investment bankers, although a swap deal between QIA and Borse Dubai is possible, there is no compulsion for Borse Dubai to sell its LSE stake.
"Borse Dubai is close to completing the acquisition of OMX shares. With the backing of OMX management and key institutional investors such as Nordea, Investor AB and SEB Funds the deal is just a formality. However, the acquisition of QIA's stake will make the deal complete. For QIA too a swap deal makes sense as its OMX stake is bound to be further diluted after the Nasdaq OMX merger," a DIFC-based investment banker said.
Sources said on Sunday that QIA's decision to pull out of a competitive bidding for OMX against the Nasdaq-Borse Dubai offer has paved the way for a potential deal between the two Gulf investors.
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