Khalaf Al Habtoor, the chairman of the Al Habtoor Group. Satish Kumar / The National
Khalaf Al Habtoor, the chairman of the Al Habtoor Group. Satish Kumar / The National

Al Habtoor postpones plans for $1.6bn IPO



Al Habtoor Group, the Dubai-based conglomerate, has called off plans for an initial public offering next year that could have raised up to US$1.6 billion (Dh5.88bn).

The family owned company, which has interests in hotels, property and car dealerships across the country and internationally, had been considering an IPO on the Nasdaq Dubai market, and a foreign stock exchange, next March or September.

But Khalaf Ahmad Al Habtoor, the chairman, said: "After a thorough evaluation I have decided to postpone the IPO. It is a moral issue not taking the group public at this time. I will continue to focus on best practice and growing the company in a sustainable way."

A statement from the group said that an independent valuation of the Al Habtoor business, prepared by the accounting firm Grant Thornton, showed a value of $6.06bn, excluding several foreign interests, substantially higher than previously estimated.

Al Habtoor also said that earnings in the current year are expected to grow 16 per cent to $192 million. It has never previously disclosed earnings.

The postponement will come as a big disappointment to the UAE financial community, which had seen a possible stock market flotation as the sign of a revival of IPO activity in the Emirates, which has seen almost no new listings since 2008.

Last week, Al Ghurair Investment, another prominent family owned group, ruled out any early rush to stock markets for its businesses.

Several leading international banks were in the running for high-earning advisory work on the IPO.

One bank executive said: "This is bad news. Some have already done a lot of work for a flotation, and were in the process of putting big teams in place to handle it."

An unidentified senior banker told Reuters: "There was a sharp discrepancy between what the group was expecting in terms of price and the reality of the underlying market here. It was a wise move to back off if you are not really sure it can be pulled off."

A group statement said: "Mr Al Habtoor added that the IPO funds would be an added responsibility to him personally, while the group ascertains where the best investment opportunities are. The large scale investments under way right now are within the group's expertise. They offer something promising to the group and the UAE."

In the past year, Al Habtoor has announced investments worth Dh5.9bn in the hospitality sector, including Dubai's "first ever integrated resort comprising of three hotels in one complex as well as a Las Vegas-style theatre".

The automotive business, which owns the rights to marks like Mitsubishi, Bugatti and Bentley in the UAE, has also invested in its dealerships and repair garages in the GCC, and is about to sign a distribution contract "with a major European tyre maker", the group said.

Mr Al Habtoor added: "I have made this decision to postpone the IPO and would like to thank the people who have advised us along the way." He gave special thanks to named executives from the Dubai and UAE financial authorities, and to Grant Thornton and other "leading financial institutions".

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