Marka aims to use Dh500m from share sale to cover retail outlet costs

The online retailer Marka, whose initial public offering begins on Sunday, said it will use cash raised from its Dh500 million share sale to cover expenses associated with the opening of retail outlets.

More than 100 outlets are in the works for the company, which plans to use half the capital raised for fashion stores and the other half towards new restaurants and cafes, a statement said.

“Marka seeks to establish itself as a leader in the retail and food and beverage markets in the GCC, said Khaled Al Muhairy, the deputy chairman of the Marka founders’ committee.

“The company’s investment strategy also includes the acquisition of franchises and the introduction of global brands, as well as taking advantage of the available opportunities to develop brands organically.”

Companies’ appetite for raising equity has surged since the start of the year amid a bull market rally.

The Abu Dhabi Securities Exchange General Index has risen 18 per cent so far this year, while the Dubai Financial Market General Index has rocketed 42 per cent in the same period.

According to the IPO plan, Marka’s founders will subscribe to 45 per cent of the company’s equity, or the equivalent of Dh225m, while the remaining 55 per cent (275 million shares) would be offered to the public in an IPO at Dh1 per share.

The company’s IPO begins on April 13 and ends on April 24.

Some investors expressed some weariness over a relatively new concept for the UAE.

“It’s a venture project, so far they have nothing and want to raise money to acquire companies,” said an investor who declined to reveal his name. “What they are saying is ‘give me the money and trust me and I’ll do something great for you’. They have no brands, and are really starting from scratch. Who will head the company? What’s the strategy? There’s no track record.”

But brokers say with the UAE bourses trading shares worth Dh180 billion since the start of the year, covering the required Dh275m will not be a difficult task.

“In fact, I think it will be oversubscribed and could collect from D2bn to Dh2.5bn,” said Mohammed Ali Yasin, the managing director at National Bank of Abu Dhabi’s brokerage arm. “The market is hungry for primary market activity – the stage before they list – because there’s liquidity that’s looking to invest in new companies.

“This is evident to us from the questions we are getting from investors, particularly retail. At the same time, banks will have a big appetite to lend against these IPOs.”

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