Retail investors could be excluded from the mobile phone retailer Axiom Telecom's initial public offering (IPO) as differences between the country's regulatory bodies stand in the way, say analysts.
Axiom plans to list a 35 per cent stake on NASDAQ Dubai that could raise between Dh200 million (US$54.4m) and Dh300m, and make it the first IPO from the UAE in almost two years. Axiom is only required to spin off 35 per cent of the company to comply with NASDAQ Dubai's requirements.
But the Dubai Financial Market (DFM), which is regulated by the Emirates Securities and Commodities Authority (SCA), requires companies to give up at least 55 per cent of shares in an IPO.
"Because Axiom has not abided by SCA's requirements by not floating at least 55 per cent, the regulator is not letting Axiom allow retail investors to subscribe to shares in the primary market," said Mohammed Ali Yasin, the chief investment officer at CAPM Investment.
In May, the DFM, the emirate's main exchange, acquired 67 per cent of NASDAQ Dubai to try to consolidate the two exchanges. It expects to own 100 per cent of the exchange by the end of the year.
The Dubai bourse offered $121m in December last year to buy NASDAQ Dubai to help boost liquidity on the market.
NASDAQ Dubai said retail investors would be able to subscribe to shares only if registered with banks listed on the exchange. It means purchases in the primary market are limited to member banks, while other retail clients will only be able to buy once shares move into a secondary market.
Active retail participation once shares start trading in the secondary market may also be limited because quotes on NASDAQ Dubai are not given live without a fee.
Axiom faces a challenge of shares denominated in the dollar. This makes it hard for local day traders, who trade with much smaller capital amounts than institutional clients, as the impact of exchange rates is more pronounced.