Marka set to be Dubai Financial Market’s first new listing in five years

The retailer announced plans to launch a Dh500 million initial public offering, becoming the UAE’s first publicly listed retailer.

Investors at the Dubai Financial Market. The last IPO on the DFM was for Drake & Scull, which began trading in March 2009. Jeff Topping / The National

The Dubai Financial Market is close to gaining its first new listing in five years after Marka, a retailer, announced plans to launch a Dh500 million initial public offering.

The UAE-based company, which is under establishment, would become the country’s first publicly listed retailer.

“We are confident that this issue will be a great success, given the significant growth prospects enjoyed by the company on the one hand and the return of confidence to the financial markets on the other,” said Mahdi Mattar, the chief executive of CAPM Investment, a subsidiary of the UAE financial company Finance House, which announced the plan yesterday. It will be the lead manager of the IPO.

The UAE has been starved of fresh listings in recent years. The last IPO on the DFM was by Drake & Scull, which began trading in March 2009. The Abu Dhabi Securities Exchange has hosted only a couple of small sales since 2008.

Plans by several companies to launch local IPOs failed to materialise as the companies chose London to list or delayed plans altogether.

But optimism about potential listings has grown as local markets posted some of the highest returns in the world in the past year. The DFM General Index is up by 128 per cent, with the Abu Dhabi Securities Exchange General Index rising by 72.9 per cent.

“The IPO will definitely go ahead,” Marka said. “Marka has already received preliminary approval from the Securities and Commodities Authority (SCA) and it will launch the IPO on the DFM as per the planned schedule. “

CAPM said the company “has no relations” with the similarly named MarkaVIP, which is a different online retailer.

CAPM said Marka’s founders would subscribe to 45 per cent of the company’s equity, or the equivalent of Dh225m, while the remaining 55 per cent (275 million shares) would be offered to the public in an IPO at a price of Dh1 per share.

Ali El Adou, the senior vice president of asset management at The National Investor, said that even though the size of the IPO was a “bit small” it was still a positive for the market.

“It is a good time to test the market and see the appetite for investors in new sectors,” he said, adding that the IPO “is good to help diversify the market and potentially may open the door to others within the retail industry [to list].”

The planned IPO comes amid reports that several other UAE companies will come forward with plans for listings. National Bank of Abu Dhabi said last month that it expected as many as six UAE companies to go public this year, raising as much as Dh8bn.

Arabtec, the UAE’s largest construction company, has announced it is setting up Arabtec Capital in the Dubai International Financial Centre to float some subsidiaries.

“Mena investors can continue to look forward to an increasing number of IPOs from the region,” wrote Irfan Ellam, an analyst at Emirates NBD, in a research note last week.

Local markets are facing stiff competition from London as a listing destination, especially for larger companies. Abu Dhabi-based Gulf Marine Services said last month it planned to sell shares on the London Stock Exchange. The Dubai developer Damac listed in London in December. Since then its stock has surged by more than 26 per cent.