Three months after closing the subscription period for its initial public offering, Marka is yet to list its shares on the broader market.
While the start-up company did not respond to requests to explain the reasons for the delay, one analyst says the market’s recent tremors could be a factor.
Besides the long lag time before listing, the Marka IPO is also unusual in that it represents shares in a company that has not yet begun operations.
This sort of offering, known as a greenfield IPO, is common in other countries but had not previously been attempted in the Emirates.
“The current volatility and performance of the UAE markets might delay the listing of the IPO as the risks of underperformance of the share might be high,” said Ali El Adou, the portfolio manager at The National Investor in Dubai.
Marka said yesterday that it was working on its listing, and that the matter “is expected to be finalised soon”, said Jamal Al Hai, its chairman.
The company added that it had been formally established as a public joint stock company, receiving final approvals from the Ministry of Economy, the Securities and Commodities Authority and the Department of Economic Development.
A company spokeswoman said the approvals had been received this week.
Mr Al Hai said the approvals would allow Marka “to start the company’s operations officially as the first public joint stock company operating in the retail and food and beverage sectors in the UAE”.
Marka’s plan is to use the IPO money to build a presence in the retail, luxury and restaurant business in the Arabian Gulf region.
Mr El Adou said one of his concerns was that if retail investors flood into the stock, its value could prove volatile.
“If the majority is retail, then we might see some volatility as retail money is highly leveraged and short-sighted versus institutional investors,” he said.
“In addition, the retail investors may overlook certain fundamental aspects of the business, especially a start-up, which may take time to ramp up its operations and pay dividend.”
In April, Marka’s IPO, which targeted a market capitalisation of Dh500 million on the Dubai Financial Market, was 36.5 times oversubscribed.
In May, Marka started its IPO refund process with a final share allocation to subscribers of 2.74 per cent, it said.
The founders own the remaining 45 per cent of the company.
The oversubscription was largely due to the small size of the offering compared with the market values of many UAE-listed companies.
The market capitalisation of Abu Dhabi Commercial Bank, for instance, is Dh45 billion, while the property company Aldar is at Dh30b and the energy company Dana Gas at Dh5.4bn.
Also, “the timing of the issuance was during a strong market rally with significant liquidity tied to economic recovery and [the] MSCI upgrade which attracted many investors,” Mr El Adou said.
He said the offering had proved attractive in April because “the sector that the company is targeting is attractive as it provides investors diversification away from the real estate and banks, and it is linked to the consumers whose spending power goes up in the afloat economy.”
Analysts including Mr El Adou want to see additional disclosure requirements on the business plans of greenfield companies to better protect investors.
Overall, Mr El Adou said, the IPO outlook for the region was promising.
“I believe that valuations and the high liquidity of the equity markets will incentivise private companies to list, which will create more depth to the UAE and the regional markets,” he said.
“This is evident in the strong IPO pipeline of more than 30 companies in the region.”
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