Dubai Desert Extreme to offload up to 40%, appoints Shuaa as advisor

Dubai-based Dubai Desert Extreme (DDE), distributor of bicycles, action sports equipment, apparel and footwear in the Middle East, is looking to offload up to 40 per cent in order to fund its massive retail and wholesale expansion across the region.
The company is in talks with a few major regional players and has appointed Dubai-based investment bank Shuaa Capital as advisor to sell the stake.
“Our company is largely self-funded because we put everything back in the business; but we are debt funded as well. We are currently also going through process of bringing in potential investors. We are in discussion 3-4 major groups which showed interested in our business. As a company, we are well exposed because we’re ranked in the top 100 Dubai SME 100 companies,” said Shahriar Khodsjasteh, chief executive of DDE.

Established in December 2001 by Shahriar and his brother Shahin Khodjasteh, DDE was recently ranked 4th in the Top 100 SME companies of Dubai as part of the Dubai SME 100.

According EY’s third quarter Mena M&A Update, combined outbound and inbound deal activity in the Middle East and North Africa region increased 40 per cent from 45 deals in the third quarter of 2014 to 63 in the same quarter 2015.

Khodsjasteh stated that the potential investors are from the UAE, Qatar and Saudi Arabia. “Being a regional company, we are looking for a strategic partner because we are already a high value company – not a start-up company. We are not looking for venture capital but a strategic partner to move forward.”

Hoping the deal to be finalised by the end of next year, Khodsjasteh said they wouldn’t offload more than 40 per cent. “We cannot divulge further information because negotiations underway now. We expect to end this year with Dh75 million revenues and target is to reach half a billion dirham in five years.”

Expansion

Dubai Desert Extreme CEO Shahriar Khodsjasteh was speaking to Emirates 24l7 during the opening of an exclusive headwear store Captiv8 at Dubai Mall targeted at the youngsters by offering an array of stylish and funky caps and headwear products by a number of globally renowned brands.

“Ten years ago when I came across a particular headwear brand, I decided that we would bring it to Middle East. It took a while to get people to understand, but at the end we created a successful business on the wholesale side of that particular brand. After 10 years, what I realised is that consumers were hungry for more choice. So I embarked on a mission to bring all the major headwear brands to the region. In a period of one year, we were able to achieve that task and we are have all the biggest headwear brands such as Caylor & Sons, Melin, 47, Neff, Starter, Mitchell & Ness, Volcom, Etnies, Altamont and Electric and so on,” he stated.

DDE has 12 outlets out of which seven were opened in the last 12 month.

“With Captiv8, we plan to have 20 of these stores in the next 3-4 years across the region. The growth driving factors will be expansion of retail as part of the half a billion dirham plan to have 50-plus stores within 5 years with 70 per cent of them in the UAE. The balance will come from the development of wholesale distribution business as we plan to set up business in KSA and Egypt with a target growth of 40-50 per cent year-on-year.”

The small and medium enterprise employs 160 people and Khodsjasteh expects to have 750-plus in five years.

Diamond-studded cap

Also on display at Captiv8 is a Dh5,000 diamond-studded cap of Melin for a special customer.

Khodsjasteh said headwear prices range from Dh75 and go up to Dh5,000 – most of them range from Dh100 to Dh175.

“We have one unique cap from Melin of crocodile leather encrusted with a diamond encrusted in the Melin emblem in the peak of the cap. There are only 13 made in the world but there is only one in the Middle East. So we are looking for that special customer.”

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