Dubai: Danube Building Materials is banking on the region's economic recovery and planning an initial public offering (IPO) within five years.

Starting with up to 40 per cent growth this year, Danube expects to raise its turnover to between Dh2.5 and Dh3 billion in the next three to four years from last year's Dh1 billion.

There are also personal reasons for the IPO, Chairman Rizwan Sajan told Gulf News.

"I want the business to continue generation after generation. We're at an initial stage of discussion. But I feel that once our turnover becomes sizeable like $1 billion, a professionally handled IPO would be the right way to go."

Danube is looking at two markets to list on: Dubai, Saudi Arabia, or maybe both. The decision hinges on which market will bring better results for the company over the next couple of years.

Teething problems

Danube has been operating in Saudi Arabia for a year now. Sajan explained that it is essential to understand the market and overcome the teething problems of setting up before success can be measured properly.

"I am giving my team in Saudi Arabia until end of this year to know where we're going. Only after two to three years will we know whether it is better to do the IPO in Saudi Arabia or UAE or both."

At present the company has one Danube Buildmart store, but depending on how this year goes, has massive expansion plans for this potentially gigantic market in place, Sajan said.

The company has set aside Dh200 million towards expanding the store's presence, currently 15 in the UAE, and one each in Bahrain, Oman and India, all representing potential growth markets with large projects in the pipeline.

In the UAE, Abu Dhabi has been singled out.

Sajan is confident the UAE's economy will bounce back soon.

We're already in a much better position. A lot of positive signs are happening in the market. Payment problems are easing and orders are going up."

Issues over payments by clients have been few for Danube, he said, thanks to careful selection of the people with whom he does business with and using bank guarantees and post-dated cheques. "Insurance covered the rest," he said.

Danube is further spreading its risk by entering markets such as China and India.