Dubai raised almost $5 billion selling a stake in port operator DP World in the Middle East's largest IPO, setting the scene for perhaps the biggest test for the emirate's two-year-old bourse where the shares will trade.

The initial public offering values DP World, the world's fourth-largest container port handler, at $21.58 billion.

Investors offered about $80 billion, according to Reuters calculations, based on a DP World statement on Wednesday that the sale was 15 times oversubscribed.

It is not a stock I would be overweight in, but nor is it a stock I would be out of, said Mohammed Alami, head of the international desk in Dubai at brokers Naeem Shares & Bonds. One of the biggest issues will trading turnover and liquidity on the DIFX.

Dubai set up the Dubai International Financial Exchange in 2005 to operate according to international regulatory standards, in a region where bourses fall short of peers in Europe and the United States.

The DIFX, in which Nasdaq Stock Market has agreed to take a 33 percent stake, lists 11 companies, all of which also list shares elsewhere. The DIFX stocks barely trade. The bigger Dubai exchange is the Dubai Financial Market.

It would be an excellent idea to have a dual listing as this would give depth to the market, and make the shares more attractive, said Wadah al-Taha, head of research at Dubai-based Emaar Financial Services brokerage. DP World shares start trading on the DIFX on Monday.

Shares of Hamburg port operator HHLA, which raised 1.16 billion euros in an IPO that was 10 times oversubscribed, have risen almost 13 percent since they started trading on November 2.

Russia's Novorossiisk Black Sea port operator raised about $1 billion in an IPO this month, pricing its Global Depositary Receipts at the top of an indicative range.

DP World, which bought Britain's Peninsula & Oriental Steam Navigation Co (P&O) for $6.8 billion last year, sold 3.818 billion shares -- equivalent to 23 percent of the company -- at $1.30 each, at the top of a range that was as low as $1.00, DP World said in the statement.

There was strong demand for the shares internationally among institutions, Chairman Sultan bin Sulayem said in a conference call with reporters.

DP World will have a solid base of international investors who are looking to grow value over time, he said.

Individual investors will get 10 percent of the shares on offer. Holders of $3.5 billion of bonds that DP World's then-owner -- Ports, Customs & Free Zone Corp -- sold last year to finance the P&O purchase, will get 25 percent and institutional investors the remainder, DP World said.

STRONG DEMAND

DP World's net profit is expected to rise 55 percent next year to $564 million, $630 million in 2009 and as much as $923 million in 2011, according to research by Dubai-based Shuaa Capital, one of the four arranging banks. That values the company at 38 times expected 2008 earnings.

The company, which manages 42 terminals in 22 countries, plans almost to double capacity to 90 million containers within a decade, expanding in countries including the United Arab Emirates and China.

DP World will record sustained growth in revenue over our forecast period, driven by regular capacity additions, continued high and even increasing utilization of most of the operator's portfolio, and a strong price environment in terms of port tariffs, Shuaa said.

Container throughput in the Middle East, where DP World is the largest operator, should grow an average 9.6 percent per year for the next five years, Shuaa said, citing London-based Drewry Shipping Consultants.

(Additional reporting by John Irish and Ola Galal in Dubai; Editing by David Holmes and David Cowell)