Dubai to sell £1.5bn stake in London Stock Exchange

Eight years after investing in the London Stock Exchange (LSE) in a bid to create an investment empire, Dubai is selling its £1.5bn stake in London's stock market.

Borse Dubai has sold its entire 17.4% stake in the LSE, around 60m shares, has been snapped up by institutional investors, with Nomura, Bank of America Merrill Lynch and Barclays managing the block sale.

The sale came only hours after Dubai announced its exit of a near decade old tie-up with the London bourse designed to block the rival Qatari wealth fund QIA from taking control.

Although details remained scant, the sale sees Borse Dubai crystallise excellent gains in the value of the stock after several years of market hopes of another round of exchange mergers.

Last year, Qatar Holding cut its 15% stake in the owner of the London stock market by a third ahead of £1bn rights issue by the LSE, in order to fund its purchase of Russell Investments.

Owned by Dubai's government via the Investment Corporation of Dubai, which owns 90% of the shares, Borse Dubai is considered a pivotal cog in the emirate's plan to become one of the world's most important financial hubs.

In 2007, Borse Dubai bought a 27% shares in LSE as part of a bigger deal with Nasdaq and OMX, aimed at preventing Qatar from seizing control of the entire exchange. Hence, Dubai seems not to have considered its LSE stake as a core asset.

Commenting on the news on Thursday morning, Mike van Dulken, head of research at Accendo Markets, believes Dubai’s main motivation was profit-taking. After all, the LSE’s shares have increased their value by a multiple of eight from their 2007 lows, he adds. “The sale is unlikely to completely derail the shares’ strong uptrend,” Van Dulken said.