Damas share offer raises $270.6 million

Damas's share offer on Dubai International Financial Exchange (DIFX) yesterday raised $270.6 million (Dh995m) – well short of the projected figure of between $350m and $400m.

"We are very happy with the results if we take into consideration the international financial situation," CEO and Managing Director Tawhid Abdullah told Emirates Business.

"This did not involve any sell-out from the partners apart from a minority stake from the Amwal Al Khaleej Commercial Investment Company, so the amount raised is quite good and we are very pleased."

Abdullah maintained the DIFX was the right platform for the Dubai-based jewellery group to launch its initial public offering (IPO). "We took enough time to decide and after a lot of consultation the DIFX seemed the best option to us," he added.

Fund managers have warned the DIFX is struggling. One company, DP World, accounts for 91 per cent of the total traded volume on the exchange, according to statistics on its official website.

Abdullah, however, believes the exchange will overcome its teething problems. "The Government of Dubai has given us an international exchange that is bound to do well and we are proud to be the first family business listed on it," he added. And Chief Financial Officer PK Dutta said: "We hope to break the jinx for the DIFX."

Unlike DP World's shares, which were subscribed at the upper limit of the offer, Damas's stock was taken at the lower limit. But Abdullah maintained this would benefit his company.

"Our offer price range was between $1 and $1.14 per share and it was subscribed at $1 per share. This was out of choice and it should work to our advantage. We hope to maintain this level and grow."

Dutta added: "We got offers at much higher levels but we wanted to leave enough to encourage the shareholders to trade and take the value of the shares up."

Equity analysts in Dubai agreed with this thinking. One said: "The fact the issue was subscribed at the lower limit suggests there will be scope for appreciation."

Other family companies could follow Damas's example and seek listings, said Abdullah. "I expect many other family businesses to go public and that's not limited to the UAE," he added. "We can see many more private companies going for IPOs across the world."

Damas received strong interest from a broad base of high quality institutional investors from both the GCC and Europe and the company believes this will form a strong share register when trading starts on July 8. The price was determined by a book-building exercise.

Damas has granted the joint global co-ordinators – Credit Suisse Securities and HSBC Bank – an option to purchase up to an additional 40,587,506 shares at the offer price by August 7. This represents up to 15 per cent of the total number of shares that were on offer.

Based on the offer price and the number of shares issued through the IPO the market capitalisation of the company is expected to be $968.6m, not taking into account the over-allotment offer.