Khalaf Ahmad Al Habtoor, the chairman of Al Habtoor Group, postponed conglomerate's public offering on moral grounds. Al Habtoor Group via Bloomberg News
Khalaf Ahmad Al Habtoor, the chairman of Al Habtoor Group, postponed conglomerate's public offering on moral grounds. Al Habtoor Group via Bloomberg News

Al Habtoor eyed listings on up to four bourses



Al Habtoor Group, the Dubai-based conglomerate, had ambitious plans to list on as many as four stock exchanges prior to the unexpected postponement of a US$1.6 billion (Dh5.88bn) initial public offering (IPO) last month.

Khalaf Al Habtoor, the chairman of the hotels to automobiles combine, said the company was considering listings on the Dubai Financial Market, Nasdaq Dubai, the London Stock Exchange, and even Saudi Arabia's Tadawul market.

The move would have been groundbreaking for the UAE. No other company is listed on both Dubai exchanges, which have common trading and back-office services but which also have significantly different listing rules.

Mr Al Habtoor said: "It would have been a good start to go on both ND and DFM. The rules could have been changed. We discussed doing this with the two markets and it was a possibility, but never promised."

He added, "It would be a good thing if they were more linked and put closer together."

On the possibility of a listing in Saudi Arabia, Mr Al Habtoor said: "It is such a big country, economy and market. Lots of institutions there were ready to help us, but we didn't get to the stage of approaching the government."

Speaking exclusively to The National at Al Habtoor's Dubai headquarters, he explained in detail why the IPO, planned for this year, had been postponed.

"It's not the first time we've considered an IPO. During the preparation this time I was working hard on projects in the GCC and Europe, but it wasn't easy to find a project or acquisition that would satisfy shareholders and give a decent return."

He said he looked at assets in Britain, Germany and France, mainly in the hotel business, but "I was not interested in just a trophy asset. I wanted one that would generate a decent return."

He also looked at possible acquisitions in Asia, "but we don't know enough about the rules and regulations there. I don't want to speculate with other people's money in Asia".

When he called off the IPO last month he cited "moral issues" as the reason, a remark that mystified some Dubai financiers.

"Morally, I was not comfortable to take other people's money and just put it in the bank, without generating a return … I had a holiday in New York and England a few weeks ago and decided against the IPO. I couldn't sleep with the thought of having so much of other people's money as my responsibility," he explained.

He made it clear the proceeds from an IPO would have been used on expansion plans in the UAE and abroad, and not to fund the $1.6bn of investment Al Habtoor is committed to over the next few years.

"That can all be funded from cash flow. We will not do it from bank borrowing. We have only a very small amount of bank debt relative to the size of our company, and none of it is related to current investment projects," he said.

Al Habtoor is building three new hotels on the site of the now-demolished Metropolitan complex in Dubai, as well as a "Las Vegas-type theatre" and residential units along a new canal planned in Dubai. Completion is expected in the next 30 months, Mr Al Habtoor said.

It is also nearing completion on a hotel on the Palm Jumeirah, expected to open in August.

The group expects earnings to rise by more than 10 per cent in 2013.

While Habtoor previously forecast a 16 per cent increase in earnings for last year to Dh700 million, he said the estimate was "conservative".

When the IPO was called off, Al Habtoor revealed a valuation of $6.06bn for the company, excluding certain foreign assets.

"The valuation was done by Grant Thornton [Al Habtoor's accounting advisers] and it doesn't mean I'm in agreement with it.

"In some areas, maybe it wasn't right. GT did a great job, but perhaps they don't see it the same way as me. Perhaps I'm in love with certain properties, they are my trophy assets.

"I wasn't happy about the valuation of the automotive business, I think that was worth more, but GT are the real professionals," he added.

The IPO preparations did not get to the stage of appointing an investment bank to head up the process.

"Some banks, like HSBC, Deutsche Bank, Goldman Sachs, Emirates NBD and National Bank of Abu Dhabi were a great help to me," he said.

He does not rule out the prospect of another attempt at an IPO.

"We will reassess it again in 2014, so it might be possible in 2015 … every two or three years we look at the scenario, and it's like a process of education … I feel like an expert in IPOs. Maybe somebody will hire me to help with theirs," he joked.

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