Dubai Parks & Resorts DFM debut disappoints as shares slip 9%
The disappointing debut was the second initial public offering to open below par on the DFM within 10 days, amid falling markets on fears for regional economies over the plummeting oil price. Some investors are worried it could slow the stream of planned IPOs on UAE markets.
The shares slumped from Dh1 par value to Dh0.93 on the opening bell at the DFM, then fell as low as Dh0.86 before trimming the losses later to close at Dh0.91, down 9 per cent.
Volumes traded were comparatively heavy, with 140 million shares changing hands. It was the biggest decliner of the day.
"The share price movement is not in our control," said Raed Al Nuaimi, the chief executive of the firm that is majority owned by Meraas Holding. "We have been very selective with our shareholders, and got some of the best in theworld, including sovereign wealth funds and family offices."
The share price fall does not affect the company's ability to proceed with its plans to build three linked leisure parks at a total cost of Dh10.4 billion by the end of 2016, Mr Al Nuaimi said. "We've started and the project is moving ahead at full speed. We needed to have a fully-funded project and we have that. We are here to create long-term value," he said.
In addition to the IPO proceeds, Dubai Resorts has arranged a Dh4.2bn loan with the US investment bank Goldman Sachs, and has received land and capital injections from the Government of Dubai.
But experts said the first day decline, coming on the heels of a similar one by the "greenfield" start-up Amanat, could have a negative influence on UAE markets and other IPOs planned in the emirates.
"People will have second thoughts, and may delay IPOs until market conditions improve," said one financier, who asked not to be named. "In the circumstances, the way global markets and the oil price has gone in the past month, to limit the first day fall to 9 per cent was a reasonable outcome."
Among companies considering IPOs are Al Habtoor Group. Its chairman Khalaf Al Habtoor said this week he was still considering whether to go for a market listing, which at a suggested $2.5bn would be the biggest of the current batch.
Gulf Capital, the Abu Dhabi-based investment group, is believed to be considering an IPO in the capital. A spokesman declined to comment on future capital-raising options. Daman Investments has announced its intention to float on the DFM in the first quarter of next year.
One DFM trader said there was nothing in the Dubai Parks IPO to attract retail investors. "The retail did not get enough of the allocation. There is no profit in IPOs in this market. I think we will see more IPOs, but not until next year when markets have improved, inshallah."
Dubai Parks significantly underperformed both UAE markets. The DFM General index fell 0.15 per cent to 3,882.9, and the Abu Dhabi Securities Market General Index rose 0.36 per cent to 4,582.19.
Dubai Parks also filed financial interim financial results with the DFM. The figures showed reduced losses of Dh7.87 million for the first nine months of 2014, down from Dh10.46m for the comparable period last year.
Dubai Parks expects 2017 to be the first year of full operations, with a profit from 2018 onwards. The level and timing of dividend payments has not been decided.
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Published: December 10, 2014 04:00 AM