Axiom out to finish IPO drought

Axiom Telecom is poised to be the first UAE company to sell shares to the public in more than 18 months, an informed source says. The Dubai-based mobile phone retailer is planning to hold an initial public offering (IPO) as soon as next month, the source said, with the shares listed on NASDAQ Dubai.

After a rally in share prices that has extended for several weeks, the proposed listing was received by UAE investors as another positive step towards a market recovery. The listing "would broaden and deepen the market and give investors some exposure to the consumer, who is not in such bad shape in Dubai", said Daniel Broby, the chief investment officer of the London asset management company Silk Invest.

Local bourses are dominated by property and banking companies, which have been among the hardest hit by the economic downturn in the region. Axiom has more than 600 stores throughout the Gulf, India and the UK, and is estimated to be valued at between Dh4 billion (US$1.08bn) and Dh5bn, sources said. Mr Broby said a positive market response could entice other UAE retail companies to go public. "It is big enough to attract attention."

The last company to sell shares in the UAE was Green Crescent Insurance, a provider of health insurance products based in Abu Dhabi that went public in March last year. Axiom Telecom is 40 per cent owned by Dubai Holding Commercial Operations Group (DHCOG), a company owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai. DHCOG is the parent company of the Jumeirah Group, a hospitality division that owns Dubai's luxurious Burj Al Arab hotel, and TECOM Investments, which owns and operates several economic free zones in the emirate.

DHCOG also owns Dubai Properties Group, the developer behind the 40-tower Jumeirah Beach Residence complex in Dubai Marina. The company's credit rating was downgraded by Moody's Investors Service in June and the Axiom IPO could provide it with much-needed cash. This month, DHCOG said it had reached an agreement to extend repayment of a $555 million credit facility until the end of November. That followed a two-month extension in July.

The source familiar with the plan said Axiom intended to sell 35 per cent of its total shares and that Shuaa Capital would be the book-runner for the transaction. Axiom officials declined to comment, as did spokesmen at NASDAQ Dubai and Shuaa Capital. Analysts have said there was a healthy pipeline of companies that would like to raise money by selling shares to the public, but they were waiting until markets recovered and seemed likely to offer what the companies thought were fair valuations for the shares.

The Omani telecommunications company Nawras said this month it hoped to raise up to 234m rials (Dh2.23bn) in the first public listing of a company there since 2008. "We might see a shift in the confidence level," the source said. "It could be the start of a number of transactions before the end of the year." @Email:breagan@thenational.ae