Future Pipeline cancels $554m initial offering

Lebanon's Makhzoumi family dropped plans to raise up to $554 million (Dh2.04 billion) in an initial public offering of its Dubai-based Future Pipe Industries (FPI), dealing the latest blow to the emirate's international standards exchange.

The Makhzoumis had planned to sell up to 35 per cent of FPI – which makes wide-diameter fibre-glass pipes – and list the stock on the Dubai International Financial Exchange (DIFX).

"Due to conditions in the equity capital market and recent events in the financial markets, (FPI) will not be proceeding with its proposed global offering at this time," FPI said in a statement on Thursday. It did not give further details.

FPI was pricing its shares at between $5 and $6.6 (Dh18.4 and Dh24.28) each, valuing the company at between $1.2 billion and $1.58 billion (Dh4.42 billion and Dh5.81 billion).

"It's another setback for the DIFX," said Tamer Bazzari, head of principal investments at Dubai-based Rasmala, which manages about $1.3 billion (Dh4.78 billion) of asset for customers, mainly in Arab markets. "There is just not sufficient liquidity."

This is at least the second time a company that planned to list on the DIFX has dropped its IPO. In 2006, Oger Telecom, owned by Lebanon's Hariri family, cancelled plans to raise $1.25 billion (Dh4.6 billion) through selling shares that would it list on the DIFX.

Dubai-government owned DP World was last year the first company to list its stock solely on the DIFX after raising almost $5 billion (Dh18.4 billion) in the Middle East's biggest IPO. Its stock has since fallen 20 per cent.

Shares of Depa Ltd, a Dubai interiors contractor which raised $432 million (Dh1.6 billion) in an IPO last month and with which FPI was competing for funds, are down 8 per cent since listing on the DIFX on April 23.

Dubai set up the DIFX in 2005 to encourage local companies to sell shares to the public, and for foreign companies to tap growing regional wealth. Thirteen companies are on the exchange, of which three are primary listings.

DP World, which was criticised for selling its shares at the top of its price range of $1.30 (Dh4.78) in October, is the only company with no listing elsewhere.

Unlike other Gulf exchanges, DIFX operates according to international standards of accounting and financial reporting.

DIFX is 33 per cent-owned by exchanges group Nasdaq OMX Group. Spokesman Mark Fisher said he could not immediately comment when Reuters called. FPI Chief Executive Officer Rami Makhzoumi could not immediately be reached for comment.

Deutsche Bank AG, Citigroup Inc and Dubai-based Mashreq advised FPI on the share sale.

FPI has benefited from a surge in Gulf Arab spending on infrastructure for towns and cities over the past few years, as well in industries such as oil and gas.

London-based MEED magazine estimates Gulf Arab states and companies have announced during the last two years, or are constructing, projects worth more than $2 trillion (Dh7.36 trillion), including $430 billion (Dh1.58 billion) on oil and gas.

The 35 million Gulf population is growing as economies surge on a five-fold increase in oil prices during the past six years, and as foreigners move in, attracted by job opportunities and tax-free income.

FPI's net profit almost doubled last year to $69 million (Dh253.92 million) on a 57 per cent surge in revenue to $556.4 million (Dh2.04 billion), Makhzoumi said in March.

In 2006, it controlled 11.6 per cent of the $3.5 billion (Dh12.88 billion) global market in fibre-glass pipes, Makhzoumi said. In the Gulf, that share was more than 50 per cent. (Reuters)

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