Mobile phone retailer in the UAE, Axiom Telecom is set to launch an IPO (initial public offering) with the potential to net Dh 200 to 300 million ($54 to 82 million). These funds will help struggling Dubai Holding, one of Axiom’s major shareholders.
Banking professionals state the Axiom could potentially offer a stake of up to 30 per cent on Nasdaq Dubai in the 4th quarter. The move would be the first public offering the nation has seen in over 24 months.
The funds generated from the sale would be put towards TECOM, the business park unit of Dubai Holding, 40 per cent owners of Axiom. It would also facilitate the cashing out of the founding shareholders.
A banker inside the deal valued Axiom at approximately DH 4 to 5 billion ($1.09 to $1.36 million). The telecom has branches around the Gulf region, as well as in India and the United Kingdom.
The leading shareholder of Axiom, with a 53 per cent stake, is Al Bannai Investments. Al Zarounia Enterprises holds the remaining stake of 7 per cent. Both of those shareholders are family-owned businesses.
Those shareholders are set to sell down their stake, but Axiom is also planning to use the generated capital for growth in the Gulf region, according to an involved banker.
Axiom dominates in the UAE, selling approximately two-thirds of all cellular phones in the nation. Established in 1997, Axiom also holds the biggest share of the Saudi Arabian market, which is much more fragmented than others in the region.
Dubai Holding is under the ownership of Sheikh Mohammed bin Rashid Al Maktoum, ruler of the UAE. The company is restructuring portions of its $12 billion debts as part of the nation’s bid to improve the balance sheet in line with the pending agreements surrounding Dubai World’s extending maturities.
The Commercial Operations group at Dubai Holding includes TECOM, as well as other properties, telecom companies and hospitality businesses. This portion of Dubai Holding is seen to be in greater financial health than other portions of the company, including Dubai Group and Dubai International Capital (DIC), both financial arms.
The DIC sought another extension for $1.25 billion in loans last week, hoping for a November date. The DIC presented proposals for restructuring that involved the sales of assets to creditors.
This IPO will be a much anticipated test of the markets after the worldwide economic crisis caused rollercoaster conditions and pushed the economy in Dubai dramatically downward.
Management of the sale will fall to Citigroup and Deutsche Bank, as well as Shuaa capital. Shuaa is under the control of Dubai Holding. The formal announcement of the sale should be looked for next week.
Axiom Telecom would not comment on these market speculations and no other involved parties issued any statements.
The Dubai Financial Market, under the control of the UAE government, took the Nasdaq Dubai under their wing earlier in 2010 and merged all trading within its higher liquidity, retail-based structure.
The hope is that merging both of these platforms will encourage the retail investors using the DFM to venture into shares listed within the Nasdaq Dubai. Liquidity in the Nasdaq Dubai has been lower than expected in the five years since the platform was launched.
Talk of another merger, this one between the DFM and the Abu Dhabi Exchange, is floating around the Abu Dhabi and Dubai governments as the benefits of a national bourse are considered.Andrew Reid, Staff Writer, Gulf Jobs Market News