International jewellery retail chain Damas is "watching the market very closely" and has not ruled out the possibility of dual listing, a top official from the company said.
Damas listed on the Dubai International Financial Exchange (DIFX) last month but trading in its stock on its debut day was listless with limited transactions and movement. "Our first love is the DIFX but if things don't go up then we have to consider other options," Chief Financial Officer PK Dutta told Emirates Business.
"It's premature to talk about a dual listing at this stage," he said. "But we will watch and only at the appropriate time, when we feel our interests will be better served somewhere else, will we look at a dual listing."
Dutta said Damas would wait six to eight more months before taking any decision. The decision would depend on how DIFX fared and Damas's stock performed. "There will be lots of changes. I don't think we'll go to the Dubai Financial Market (DFM). People have been unnecessarily unfair to DIFX in a very short period. They don't have the patience. If you look at exchanges around the world they took a bit of time to mature, they don't mature overnight."
Dutta said the company has done the right thing in listing on the DIFX.
"DIFX is a UAE concept yet international. Damas is homegrown but we have international aspirations. Apart from that we didn't really want to throw away 55 per cent, we wanted to float only the minimum which was 25 per cent. Then in our discussions with DIFX personnel and our bankers we found that the process at DIFX was much more modern and quicker, and the listing was almost immediate when we made our decision. And of course we preferred the book-building process, which was allowed in DIFX."
Damas – the first retail stock listed on the exchange – said earlier that it planned to invest on organic and inorganic expansion and intended to restructure its debt between now and 2010. The funds raised from the market would finance plans to set up 50 new retail branches this year, increasing the number of outlets opened in 2008 to 130 and pushing up the size of the chain to 569 branches.
Damas stock gained five cents during the first day of trading through six transactions of 331,775 shares at a total value of Dh348,364.
The DIFX after-market did not produce a big immediate appreciation similar to that achieved by Drake & Scull, which chose to go the DFM route. The rulebook drawn up by the regulator, the Emirates Securities and Commodities Authority, says shares listed on the DFM must be offered at their nominal par value of Dh1, with investors allowed to set the actual trading price when dealing opens.
Damas chose the more sophisticated listing procedures of DIFX, which allows investors to help set the flotation price via a book-building exercise designed to pre-test market appetite for the shares. D&S attracted a high level of oversubscription, as is usually the case with a DFM listing, and this resulted in a big opening price jump which was followed by a rapid levelling off of interest, as was the case with Ajman Bank.
Fund managers have warned DIFX is struggling. One company, ports operator DP World, accounts for 91 per cent of the total traded volume on the exchange, according to statistics on its official website.
DP World, which owns the UK's P&O, listed on the DIFX last year, raising $5 billion (Dh18bn) in the region's biggest initial public offering. But the share price has fallen sharply. Jeffrey Singer, the new CEO of DIFX, said both the exchange and Damas had been "very successful" stories. "Damas is recording 300,000 shares a day so that's not bad liquidity," he said.
HSBC Bank was one of the joint global co-ordinators for the Damas IPO. David King, Managing Director of HSBC Mena, said the float mirrored the type of IPO activity the bank had undertaken in London, New York and Hong Kong.