Logistics company Tristar to float on the Dubai Financial Market

The company is looking to raise as much as $160m through the sale of new shares

Tristar has a fleet of more than 2,000 lorries and 35 maritime vessels. Image courtesy of Tristar

Logistics company Tristar is to float on the Dubai Financial Market with a view to raising up to $160 million through the sale of new shares.

The company, based in the Jebel Ali Industrial Area, was founded in 1998 as a road transport business but has evolved to become a partner to major national and international oil companies.

It is expected to list its shares next month.

The company's flotation on the DFM "has been part of our long-term plan", Eugene Mayne, group chief executive of Tristar, told The National.

"But it has taken us the last two years. We had to get ourselves prepared ... to grow from a family type of business to having corporate procedures, policies and discipline," he said.

Tristar's float will be the first company listing on the DFM since Emaar listed its property development arm in 2017, although Al Mal Capital listed a real estate investment trust in January and Chimera Capital listed a couple of exchange-traded funds.

"We like to be on our home market and our goal is to be a successful company on the DFM itself," said Mr Mayne.

The time taken to prepare for its listing has worked in its favour, he said, with global equity markets at a record high.

"We are the first after many years but I hope this will be a catalyst for other companies to follow," he said.

The fundraise of up to $160m is based on a primary listing of 199 million new shares. A secondary offering of 88.76 million shares held by existing investors will also be made. If all of the shares are allocated, it will equate to 24 per cent of the company.

The shares are being sold by the company's three significant shareholders: Kuwait-based logistics group Agility, Gulf Investment Corporation and an investment vehicle owned by Mr Mayne, with 65.12 per cent, 19.61 per cent and 15.27 per cent of the shares, respectively.

Tristar has a fleet of more than 2,000 lorries and 35 maritime vessels. It operates 69 fuel farms and more than 100 remote sites in 21 countries across three continents.

The company, which was founded by Mr Mayne, has grown revenue by an average 12.4 per cent over the past three years to $453.4m by 2020, on which it made earnings before interest, tax, depreciation and amortisation of $103.6m.

It plans to use some of the proceeds of the float to repay Dh197m ($53.6m) in debts to related parties as it looks to reduce current net debt-to-ebitda levels of three and a half times as at the end of last year to between 2.2 and two and a half times. 

The rest of the funds will be used for general corporate purposes and routine capital expenditure, said Mr Mayne.

It paid a dividend of $29.6m to shareholders last year, including a special $19.6m pre-initial public offering dividend.

For its 2021 financial year, the company said it set a pay-out ratio target of 60 per cent to 70 per cent of net income. In the following years, it expects to pay about 60 per cent of net income as a dividend.

"Tristar comes with a proven business model with stable margins, despite the impact of the pandemic last year," said Junaid Ansari, head of investment strategy and research at Kamco Invest.

The company's client base means it offers stability for investors looking for defensive stocks, and its ebitda margins of about 20 per cent for last year are much higher than the sector average of about 11 per cent, which could support a higher valuation on listing, he said.