Business | General
Future Pipe drops $554m IPO plan
The Makhzoumis had planned to sell up to 35 per cent of FPI - which makes wide-diameter fibre-glass pipes - and list the stock on the Dubai International Financial Exchange (DIFX).
- Agencies
- Published: 00:30 May 2, 2008
Dubai: Lebanon's Makhzoumi family drop-ped plans to raise up to $554 million in an initial public offering of its Dubai-based Future Pipe Industries (FPI), dealing the latest blow to the emirate's international standards exchange.
The Makhzoumis had planned to sell up to 35 per cent of FPI - which makes wide-diameter fibre-glass pipes - and list the stock on the Dubai International Financial Exchange (DIFX).
"Due to conditions in the equity capital market and recent events in the financial markets, [FPI] will not be proceeding with its proposed global offering at this time," FPI said in a statement on Thursday. It did not give further details.
Pricing
FPI was pricing its shares at between $5 and $6.6 each, valuing the company at between $1.2 billion and $1.58 billion.
"It's another setback for the DIFX," said Tamer Bazzari, head of principal investments at Dubai-based Rasmala, which manages about $1.3 billion of asset for customers, mainly in Arab markets.
"There is just not sufficient liquidity."
This is at least the second time a company that planned to list on the DIFX has dropped its IPO. In 2006, Oger Telecom, owned by Lebanon's Hariri family, cancelled plans to raise $1.25 billion through selling shares that would it list on the DIFX.
DP World was last year the first company to list its stock solely on the DIFX after raising almost $5 billion in the Middle East's biggest IPO. Its stock has since fallen 20 per cent.
Shares of Depa Ltd, a Dubai interiors contractor that raised $432 million in an IPO last month and with which FPI was competing for funds, are down eight per cent since listing on the DIFX on April 23.
FPI has benefited from a surge in Gulf spending on infrastructure for towns and cities over the past few years, as well in industries such as oil and gas.
FPI's net profit almost doubled last year to $69 million on a 57 per cent surge in revenue to $556.4 million, Makhzoumi said in March. In 2006, it controlled 11.6 per cent of the $3.5 billion global market in fibre-glass pipes, Makh-zoumi said. In the Gulf, that share was more than 50 per cent.
Initiative
Dubai set up the DIFX in 2005 to encourage local companies to sell shares to the public, and for foreign companies to tap growing regional wealth. Thirteen companies are on the exchange, of which three are primary listings.
Unlike other Gulf exchanges, DIFX operates according to international standards of accounting and financial reporting.
DIFX is 33 per cent-owned by Nasdaq OMX Group.
Deutsche Bank, Citigroup and Dubai-based Mashreq advised FPI on the share sale.
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