It’s tempting, isn’t it? A few years of decent profit and double digit growth, and off you go to the nearest stock market. Float the company, raise a few hundred million and begin those long-awaited expansion plans. What could possibly go wrong?
As every public company boss knows, plenty. Being at the mercy of analysts, shareholders and market sentiment is no fun. This week we report on the likely upturn in fortunes for Emaar, Drake & Scull and Arabtec. In my view, three of the finest companies ever created and managed – yet their share prices (at long last rising) don’t quite portray that.
Which is why I was so impressed with Yogesh Mehta, our cover star this week. The founder of Petrochem started his company 17 years ago, and has long resisted going down the IPO route. Which proved the right decision when in late 2008, as the global recession set in, he was staring at $17m worth of losses. What did he do? Speculate on the future of chemical prices, which soon rose 300%. In just nine months, he has gained back all his losses. Imagine trying to get that past shareholders.
Not a chance, not a hope. But Mehta is finally thinking about an IPO – though he says it probably won’t be for at least another five years. And why even do an IPO? He tells me: “It is to take some money. We’ve been working for 17 years in this company – the money is invested in the company and that is the goal. We feel we have done that and it is time to take some profits and have a swansong.
To enjoy the good life.”
And so he should.
Show me the money
Talking of IPOs, in a recent interview with this magazine, GEMS director Dino Varkey suggested he too may be looking for a stock market listing.
To quote Varkey, “The ambition that we work towards is five million students by 2024. If we got to the five million number as a conservative [estimate] we would be a $60bn company; we would be employing 450,000 teachers, 55,000 senior leaders – that’s the size of organisation that we are trying to build.”
I take my hat off to him – nobody has done more for the UAE private school sector than the Varkey family. Though I do wonder, if the company goes down the IPO road, will we finally get to study GEMS’ accounts? As many parents know, GEMS sometimes charges over $100 merely for the privilege of registering their child for a place in one of its schools. The money is kept, regardless of whether a place is secured or not.
When I wrote about this recently, GEMS called me to explain the cash was going towards the “application process.” Really? One hundred dollars to fill out a few forms?
I hope GEMS does IPO because this is an excellent company that will be a phenomenal success on any stock market. And at long last, we might find out exactly how much cash GEMS is raking in from this practice.
Unsound survey
Dubai has taken more than its fair share of bashing lately, not helped by a rather ludicrous survey which branded the emirate “unsafe.”
I can only presume nobody who participated in the survey was in Dubai last week during the Cricket World Cup. I was at Le Meridien Hotel to watch India v Pakistan, along with my 16-month-old son. Over 2000 cricket fans were there, from India, Pakistan, Australia, South Africa, England, Sri Lanka – and plenty of Arabs also keen to join in the festivities. Not a hint of trouble, just a celebration of different cultures, races and religions. Dubai at its very best.
As dodgy surveys go, this one by UK travel agency Sunshine surely ranks first.
Anil Bhoyrul is the Editorial Director of Arabian Business.
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