Damas first to raise caital through IPO

DUBAI - Damas Group has become the first family-owned business in Dubai to raise capital through initial public offering (IPO). The proceeds from its proposed IPO will be used to expand the company’s retail presence in the key overseas markets, as well as focus on the production of diamond jewellery at its Dh60 million manufacturing facility to be built within Dubai Metals and Commodities Centre (DMCC).

By Jamila Qadir

Published: Thu 21 Oct 2004, 9:53 AM

Last updated: Thu 2 Apr 2015, 12:40 PM

The group believes that corporatisation is the name of the game. “Our intention from an IPO is not to raise funds per se, but to convert a family-owned business into a corporate entity that will ensure business continuity for years and decades to come. We feel that a conversion into a corporate entity with a wider shareholder base puts us in a better position to compete in an increasingly competitive environment in future,” says Tawhid Abdullah, managing director of Damas.

According to him, the formal application for the IPO, which was submitted to Dubai Department of Economic Development was approved by DED and passed to the Ministry of Finance and Industry. “It is now with the Ministry and we hope that it will be approved soon,” he says.

While the final approval from the authorities is awaited, the IPO is expected to evoke a very favourable response from the investor public. It would also represent one of the first IPOs from a company with a track record. Recent IPOs in the UAE have been primarily of start-ups.

Emirates Financial Services (EFS) is acting as the arranger for the proposed IPO, which is expected to be launched before the end of this year, while Clifford & Chance is the legal adviser and KPMG is the auditor. “We have been working with EFS on this plan for one year now,” he says, adding that the IPO could offer up to 55 per cent to UAE and other AGCC nationals.

The total size of the new company will be Dh2 billion, including Dh900 million of the existing capital and Dh1.1 billion of the new subscription. Last year the company recorded over Dh90 million of net profit, while this half year’s per formance is 14 per cent over budget.

He says that up to 30 per cent of the equity proceeds will go towards expansion in the rest of the AGCC, Middle East and India, which have been identified by Damas as the key overseas markets. “We are also planning to create one of the most sophisticated manufacturing facilities at the DMCC, which will eventually provide 20 per cent of Damas’ jewellery volumes.”

Franchising to provide opportunity for young UAE nationals is another option, according to Abdullah, that Damas will actively consider in future. Currently, non-UAE business represents 30 per cent of the Damas business, while the proposed expansion targets the 50 per cent mark.