Best of 2012: Khalaf Al Habtoor interview

Khalaf Al Habtoor’s plans to raise $1.6bn in a stock market listing took investors by surprise last week. But it could also prove to be exactly the kick-start the market has been waiting for

Khalaf Al Habtoor has been dreaming of announcing an initial public offering (IPO) for more than two decades. The Emirati, who made his fortune in construction and hotels, has often talked about the importance of going public as a way of securing the Al Habtoor Group’s future beyond its current management. But it wasn’t until last week that the chairman and founder officially announced his intentions to go public.

“We’ve been talking about an IPO for more than 20 years but for some reason or another it hasn’t happened. Now, after several meetings with Nasdaq Dubai and DIFC and the encouragement from financial institutions who are interested in shares, we will go for an IPO,” Al Habtoor tells Arabian Business.

The group, whose operations span businesses ranging from construction, hospitality, automotive and real estate, hopes to raise $1.3-$1.6bn by listing on the Nasdaq Dubai as early as March next year as it moves to expand its business into Europe and new areas of interest.

“We are not divesting our shares; we are going to release the capital and all of the money will go to the company, it will not go to any [one] person. We are going to reinvest it in projects within our group, in the UAE and outside the UAE in countries like the United Kingdom and Paris,” adds Al Habtoor.

The number of family-owned companies looking to go public plunged in the wake of the economic downturn amid weak investor sentiment due to underperforming stocks and risk aversion.

While regional IPO activity has started to show some signs of recovery, analysts say the Al Habtoor Group’s listing could act as a boost for other family businesses to follow suit and at the same time boost liquidity on the Nasdaq Dubai, which has struggled to attract big-ticket names amid low trading volumes.

“This will be a turning point for them [the Nasdaq Dubai], a turning point for the industry and for the market capitalisation as a whole,” says Haissam Arabi, founder and CEO of Gulfmena Investments.

“If the likes of the Al Habtoor Group and other family businesses join, then you are getting closer and closer to Saudi Arabia and [the UAE] establishing itself as a second largest market of the region,” he adds.

The Dubai-based firm is likely to have opted for the dollar-denominated bourse over its competitors — the Dubai Financial Market (DFM) or the Abu Dhabi Securities Exchange (ADX) — due to regulations that require an ongoing 25 percent free float is maintained rather than the 55 percent required on the DFM and ADX. Al Habtoor says he will list 25 percent of the value of the company on the bourse, enabling its management to release the capital while still maintaining control of the firm.

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Posted by: John

This will make or break Nasdaq Dubai, although you can be pretty sure the offering will be well over-subscribed, even for the window dressing value. There is no risk to Al Habtoor because the government will be in the gloaming to ensure this goes according to plan. It may well create the liquidity that has eluded the remaining dozen stocks, and it will certainly take the spotlight off the ginormous debt problems facing Dubai Group, Nakheel et al.

Posted by: Riyad

This is the first UAE and family owned conglomerate to be listed .. Wish Al Habtoor best of luck and success in their plans .

Posted by: Lobo

Al Habtoor Group should consider the following during the IPO.

1. Valuations of the Company should be more realistic. Should not be like Facebook IPO.

2. The pricing should be attractive not only attractive to institutions but also to retail individual investors. A small discount of 5% to individual retail investors would be a great idea.

3. 20 to 30% of the offering should be reserved for small and retail investors.

4. The offering should be through book building process where in the offering price shall be finalized based on the bidding received by the buyers. Investment Bankers should fix the the floor price very attractively so that investors are left with some value on their plates.

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