UAE mobile phone retailer Axiom Telecom has cancelled its planned initial public offering (IPO) and listing on Nasdaq Dubai, blaming weak market conditions, in what would have been the country’s first public share sale in nearly two years.
Axiom had generated sufficient orders to fully cover the IPO book at the price range, which would have valued the company at between $760m and $1.093bn, but said “widespread concerns about market conditions and liquidity” had led it to withdraw the offer, though it would re-evaluate its options in the future.
The Gulf’s largest mobile phone distributor had planned to list up to 35 per cent of its shares in the company, which is 40 per cent owned by Dubai Holding, with the remainder owned by two family groups.
“We have taken the difficult decision to cancel the IPO, despite strong demand from international investors, with many subscribing at the top of the price range due to their positive long-term view on Axiom,” says Faisal al-Bannai, founder and chief executive officer (CEO) at Axiom Limited.
“We remain extremely confident in the strengths of Axiom’s business, growth prospects and suitability as a public company and will be re-evaluating our options in the future.”
On 21 November, Axiom Telecom announced that its IPO was only going to be offered to institutions in light of subdued retail investor interest, which had led to the three Gulf IPOs that closed in the second half of 2010 all pricing at the bottom of the range.
Saudi Arabian contractor Al-Khodari failed to cover the retail tranche of its $163.2m IPO, while Omani telecoms operator Nawras had to extend its share sale period by one week until 21 October due to weak retail interest. Even then, despite being the first company to list in the sultanate since July 2008, it raised $473m out of its targeted $608m.
In early November, Aluminium Bahrain (Alba), raised just $338m out of its targeted $541m after its IPO priced at the bottom of the range. Alba is the world’s fourth-largest producer of aluminium by capacity.
Dubai’s two stock exchanges completed their merger in July 2010 after the Dubai Financial Market (DFM) acquired a 67 per cent stake in Nasdaq Dubai for $121m in a desperate bid to boost its liquidity.
Nasdaq Dubai was losing $1m a month prior to the merger, but today is operating a loss of $500,000, according to Essa Kazim, managing director and CEO at DFM.