April 9, 2013 / 2:18 PM / 5 years ago

Alafco picks Deutsche to advise on London listing - sources

DUBAI, April 9 (Reuters) - Kuwaiti aircraft leasing company Alafco has hired Deutsche Bank to advise it on a potential sale of global depositary receipts (GDRs) in London, two bankers aware of the matter said on Tuesday.

The bank is looking at Alafco’s operations to ensure it is ready for the additional scrutiny that comes with a London listing, the sources said, speaking on condition of anonymity as the information is not public.

A GDR represents a block of shares in a company. GDRs are often issued by firms in emerging market countries to allow foreign investors to buy the stock more easily.

Alafco’s parent company, Kuwait Finance House (KFH), said in January that some of the leasing firm’s shares may be listed on an international exchange and due diligence was planned, although it gave no further details.

Alafco made a profit of 25.6 million dinars ($89.7 million) in its last financial year ended on Sept. 30, 2012, a 45 percent decline from the previous year.

The timing of the GDR sale and the amount, if any, that a listing could raise were still unknown, the bankers said.

In response to Reuters queries on the planned listing, Alafco referred back to the statement in January, adding: “We are still conducting that study and we have not reported anything back to our shareholders.”

Gulf companies have been looking to London and other stock exchanges outside the region for both initial and secondary listings as local markets struggle to shake off the impact of the 2008 market crash.

Kuwait’s stock market soared in the mid-2000s as local firms used cheap credit to invest, only to collapse in 2008 as the financial crisis prevented the refinancing of those loans. The exchange’s benchmark index is still down 55 percent from its June 2008 peak.

While there has been some improvement in market performance in regional bourses such as Dubai, which on Tuesday hit its highest since late 2009, over 40 percent of investors in the Middle East and Africa would prefer to invest overseas, a recent study by accountancy firm Ernst & Young showed.

Qatar’s Doha Bank plans a London GDR offering as part of a $1.6 billion capital increase, while Abu Dhabi-based NMC Healthcare completed a $187 million share sale in London last March.

KFH, one of the largest Islamic lenders in the Gulf Arab region, owns 53.69 percent of Alafco, according to its website. State-run Kuwait Airways Corporation owns 11.47 percent and private investors hold the rest. ($1 = 0.2856 Kuwaiti dinars) (Editing by Dinesh Nair and Tom Pfeiffer)

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