Abraaj plans $1bn IPO

Dubai-based private equity firm Abraaj Capital said on Wednesday it aims to raise about $1 billion selling shares in an initial public offering next year to finance the acquisition of a Middle East finance company.

Abraaj, which manages about $4 billion of assets, plans to sell new shares equivalent to between 20% and 30% of its combined capital in the third quarter and list the stock on the Dubai International Financial Exchange (DIFX), Chief Executive Officer Arif Naqvi told Reuters.

"We are going to a buy a financial services asset in the Middle East," Naqvi said, declining to be more specific. The purchase will cost "significantly" more than $1 billion, he said.

Abraaj said on Tuesday it attracted $1.2 billion for an infrastructure fund it manages that has invested in assets including a stake in Sharjah-based Air Arabia and in taking over an Egyptian fertiliser company. It plans to close the fund at $2 billion by year-end.

Abraaj is close to hiring a financial advisor to help arrange the IPO, Naqvi said, declining to be more specific.

Dubai set up the DIFX in 2005 to operate according to international regulatory standards, and encourage local companies to sell shares to the public and for foreign companies to tap the region's oil-driven wealth.

Nasdaq will take a 33% stake in the DIFX under an agreement with DIFX parent company Borse Dubai involving their takeover of Nordic and Baltic share markets owner and technology company OMX AB.

Gulf interest in selling shares in IPOs has grown since the United Arab Emirates, of which Dubai is the second-largest member, in August allowed families to retain as much as 70% of the firms they put up for sale.

The earlier limit of 45% had discouraged UAE families, some of which have built up multi-billion dollar businesses on the back of oil-driven wealth, from selling shares.

Depa United Group, a Dubai-based interiors contracting company, aims to raise at least $400 million in the first half and list the stock on the DIFX, with Global Depositary Receipts on the London Stock Exchange to "provide additional liquidity," Noor Sweid, a Depa United official, told Reuters on Tuesday.

Gulf Arab IPOs fell 4% in the first nine months to $5.9 billion after three consecutive years of growth, as investor demand declined, especially in Qatar, Kuwait and Bahrain, said a report by Abu Dhabi-based private equity firm Gulf Capital.

On average, investors offered 6.1 times - or $1.3 billion per sale - more than companies were seeking to raise during the nine months to September 30, compared with almost 47 times more in the year-earlier period, Gulf Capital said.

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