Axiom share sale to exclude retail investors

21 November 2010

Initial public offering implies market capitalisation of between $760m and $1.093bn

UAE mobile phone retailer Axiom Telecom will exclude retail investors in its forthcoming 35 per cent share sale on Nasdaq Dubai, which is expected to value the company at between $760m and $1.093bn.

The price range has been set between $0.80 to $1.15.

Axiom will be using $100m of the proceeds to repay a portion of the company’s existing bank debt. The company says any balance will be used for other general corporate purposes.

“Net proceeds from the primary offer are intended to further strengthen Axiom Telecom’s balance sheet to be able to support the future growth requirements of the group and to reduce reliance on existing borrowing lines,” the company said in a statement on 21 November.  

Germany’s Deutsche Bank is acting as sole global coordinator, as well as joint bookrunner for the IPO along with the US’ Citigroup and the UAE’s Shuaa Capital.

Its offering is only being made available to institutional investors and is equivalent to 332,350,000 ordinary shares.

The management roadshow and bookbuilding process will start on 21 November and is expected to end on 3 December 2010.

Gulf companies are increasingly opting for bookbuilding rather than floating shares at a fixed price to squeeze out more value as IPOs pick up.

Although relatively untested in the region, both Omani telecoms operator Nawras and Bahrain’s aluminium manufacturer Alba opted for a book-build in the second half of 2010.

Axiom’s decision to exclude retail investors comes in the wake of three Gulf IPOs, including the two mentioned above, that have closed in the second half of this year, which have all priced at the bottom of the range due to weak retail investor appetite.

Saudi Arabian contractor Al-Khodari failed to cover the retail tranche of its $163.2m IPO, while Nawras had to extend its share sale period by one week until 21 October due to subdued retail interest.

In early November, Alba raised just $338m out of its targeted $541m after its IPO priced at the bottom of the range.

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