Wall Street in the Desert?

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Qatar officials declined to comment, but their bid for OMX forced Borse Dubai to raise its offer by some $700 million.

SHEIKH'S MANDATE
Still, Dubai has the upper hand in the competition. Just about every major bank on earth has set up shop in or near the polished stone complex called the Dubai International Financial Center, aiming for work on mergers and acquisitions, Islamic finance, and lending for projects ranging from oil refineries to luxury hotels. Qatar's financial industry, by contrast, is largely focused on the local market, though it will likely get a boost from growing cooperation with the LSE. "I think I'm the only investment banker in Doha," quips Kapil Chadda, head of investment banking for HSBC in Qatar.

Central to Dubai's efforts are Ba'alawy and Essa Kazim, a 44-year-old with an M.A. in economics from the University of Iowa. In August the sheikh merged the successful local exchange with the two-year-old Dubai International Financial Exchange (DIFX), a bourse with British-style regulation aimed at international investors that has been something of a flop. Al Maktoum named Ba'alawy vice-chairman and Kazim chairman of the merged company, Borse Dubai. And he gave them a mandate to cut deals that would boost the emirate's profile in global finance. Ba'alawy is the strategist and diplomat, close to Mohamed al Gergawi, the ruler's right-hand man, and on good terms with outside players such as LSE boss Clara Furse. Kazim, on the other hand, has won wide respect for his work in building the local bourse into a big moneymaker.

Ba'alawy and Kazim quickly singled out OMX. So last spring the Dubai moneymen offered to buy 30% of the Swedish outfit but were brushed off. When NASDAQ on May 25 announced a $3.7 billion offer for OMX, Borse Dubai countered with its own bid of $4 billion. With the help of bankers at JPMorgan Chase & Co. (JPM) and HSBC (which is providing nearly all the financing for the deal), the two teams kicked off a series of meetings in London and New York. NASDAQ CEO Bob Greifeld—who will also become vice-chairman of the DIFX—says he was reassured by the Dubai executives' "organized and methodical" approach. He decided that the two groups didn't need to be adversaries. NASDAQ saw OMX as a way to expand into northern Europe, while Dubai wanted OMX's technology to use in emerging markets, especially around the Gulf. "We went after OMX," Kazim says, "and we wound up with a better brand."

Reed is London bureau chief for BusinessWeek .