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Tue 21 Sep 2010 08:44 PM

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UAE telecom retailer Axiom eyeing 2010 IPO

Dubai based mobile phone distributor has been eyeing a public offering since 2005.

UAE telecom retailer Axiom eyeing 2010 IPO
IPO LISTING: UAE retailer, Axiom Telecom, is eyeing an IPO for a listing on Nasdaq Dubai. (Getty Images)

UAE based retailer Axiom Telecom, which is 40 percent owned by a unit of conglomerate Dubai Holding, is eyeing an initial public offering for a listing on Nasdaq Dubai, the first IPO from the Gulf state in two years.

Deutsche Bank is the sole mandated arranger on the deal but other banks could also play a role, a source familiar with the matter said on Tuesday.

Axiom Telecom is considering listing on Dubai's second index, Nasdaq Dubai and the deal is expected to be announced next week, the source told IFR, a Thomson Reuters unit, without offering further details.

Daniel Broby, chief investment officer at fund Silk Invest, said: "Finally, Dubai is showing signs of life as a capital market. As the largest distributor of leading international wireless brands, with 20% plus growth, I expect Axiom shares will fly of the shelf in the same way as its Blackberrys do."

He added: "It's just a matter of price, and comparable valuations in Dubai are cheap. It will be good to focus on fundamentals once again."

The Dubai based mobile phone distributor has been eyeing a public offering since at least 2005. In 2007, its chief executive said the firm wanted to float shares by 2010.

When contacted by Reuters, a spokeswoman for Axiom said: "Any market rumours at this time on a transaction are pure speculation and it is not appropriate for us to comment."

TECOM Investments, part of Dubai Holding Commercial Operations Group (DHCOG), owns 40 percent of Axiom. DHCOG has interests in several telecoms firms, including a 19.5 percent stake in telecom provider Emirates Integrated Telecommunications Co, also known as du.

DHCOG, itself a part of Dubai Holding, said in June it may resort to asset sales to deal with its debt after posting a $6.2 billion loss for 2009.

Dubai firms, weighed down by massive debt burdens, have been restructuring obligations as the emirate finds its footing after Dubai World's debt crisis last year.

Two other sources told Reuters there had been market talk about Axiom Telecom in recent weeks and an IPO was expected.

A banker, who did not wish to be identified, said: "It is a company that has a nice equity story, it will be seen as a good model."

If successful, Axiom Telecom will be the UAE's first IPO this year and the first since 2008. Market sentiment delayed another public offering that was scheduled for last June.

The minimum requirement for listing shares on Nasdaq Dubai is 25 percent. In comparison, companies are required to list a minimum of 55 percent on Dubai Financial Market, the emirate's main index.

Dubai set up Nasdaq Dubai, formerly the DIFX, in 2005 to encourage local companies to sell shares to the public and to help foreign investors tap regional wealth but trading volumes have fallen short of expectations.

Only government linked ports operator DP World trades on a daily basis.

Bankers say the telecoms and retail sector will lead an IPO revival in the Gulf as investors look to diversify their equity portfolio in the region.

After a sharp slump in IPOs in the last two years, Omani telecoms operator Nawras' IPO opened for subscriptions on Sept 15 in a test of whether deal pricing meshes with current market sentiment. (Reuters)

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