DUBAI: UAE retailer Axiom Telecom plans to list a 35 percent stake on the Nasdaq Dubai and use the proceeds partly to repay bank debt, in what would be the first initial public offering (IPO) from the Gulf state in two years.
Axiom, which is 40 percent owned by a unit of conglomerate Dubai Holding, said it would offer new shares while current shareholders would also sell stakes in the IPO, which is being run through a book-building process.
Axiom’s existing shareholders, including the Dubai Holding unit, will off-load their stakes on a pro-rata basis, Chief Executive Faisal Al Bannai said in a conference call.
"All shareholders will dilute pro-rata. No one is exiting faster than the other," Bannai said.
Axiom has yet to decide on the portion of shares which will be allocated to retail and institutional investors or on the size of the proposed offering, expected to close by the end of this year.
"The final structure will be decided closer to the offering," Bannai said.
The listed firm, Axiom Limited, will be the holding company for Axiom Telecom, in which Bannai has a 53 percent stake and Al Zarouni Enterprises has 7 percent.
Axiom, which employs more than 1,500 people, said it had revenue of 3 billion dirhams ($816.8 million) in the first half of the year and 5 billion dirhams for 2009.
The Gulf IPO market came to a virtual standstill during the global financial crisis but the market has been slowly reviving.
Omani telcom Nawras’s IPO opened for subscription on Sept. 15 but on Wednesday it had to extend the offer period by a week as retail demand was weak.
Nasdaq Dubai Listing
Nasdaq Dubai, where Axiom plans to list, has been striving to attract investor interest amid weak trading volumes.
Currently only one company —port operator DP World— trades on Nasdaq Dubai, one of two bourses in Dubai, on a daily basis.
"The IPO by Axiom is extremely good for the market at current times. However, it could have been listed in the Dubai Financial Market (DFM) rather than Nasdaq Dubai," said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments in Dubai.
"Usually investors prefer DFM due to the wide range of stocks available on it. But Axiom is still a strong company and it will do well."
Bannai said he was confident the issue would attract interest from retail due to Nasdaq Dubai merging its back-end operations with sister exchange DFM earlier this year.
Deutsche Bank is joint book runner for the issue, along with Citigroup Global Markets and Shuaa Capital.
The Dubai-based mobile phone distributor has been eyeing a public offering since at least 2005 and in 2007; its chief executive said the firm wanted to float shares by 2010. TECOM Investments, which holds the 40 percent stake in Axiom, is part of Dubai Holding Commercial Operations Group (DHCOG), a unit of Dubai Holding.
DHCOG has interests in several telecoms firms, including a 19.5 percent stake in telecom provider Emirates Integrated Telecommunications Co., also known as du.
Additional reporting by Praveen Menon.
