Dubai logistics firm Tristar's IPO withdrawal could force rethink by others

Dubai: Dubai businesses planning an IPO will have a rethink after Tristar, the logistics company, decided to pull out from its stock float.

Tristar was planning to list on DFM next week and hoping to raise between $120 million to $160 million. The funds thus raised were to be used to clear off a Dh197 million debt it had on the books.

In a statement Wednesday (April 14) evening, Tristar gave this statement: “The board and existing shareholders believe that greater returns can be realised executing Tristar’s current growth strategy under the established shareholder structure.”

If it had gone ahead, this would have been only the second IPO on DFM in three years. Just recently, in January, Al Mal Capital REIT raised Dh350 million (as against the initial target of Dh500 million).

DFM is currently seeing the de-listing process of DXB Entertainments, the theme parks operator, by Meraas. And in March, Emaar Properties confirmed it is bringing Emaar Malls back into the fold, which will mean that too will be de-listed.

A pause?

“There will likely be a pause on any new IPO plans,” said Vijay Valecha, Chief Investment Officer at Century Financial. About Tristar, “I think it was just a lack of demand and they would have been advised to perhaps stay private since they still could control things.”

As per its IPO plans, Tristar was tapping institutions and high networth individuals for the IPO, with the minimum investment set at Dh500,000. Kuwait’s logistics and warehousing giant Agility and Tristar’s founder Eugene Mayne would have remained as key shareholders.

Tristar operates a massive facility in Jebel Ali Free Zone and has extended its energy sector focussed logistics services into the Middle East, Africa and India. Image Credit: Supplied

Await the big guns

The next big announcements on IPOs could come from government-owned entities. A top Mubadala official had spoken about Emirates Global Aluminium – equal owned by Dubai and Abu Dhabi - going public. Other government entities could also be moving into the IPO space.

What next for DFM?

The Dubai stock market has been pressure, especially around banking stocks. “The Dubai index has recovered from swing lows in late March,” said Kaia Parv of FXPrimus. “Price attempted to break the 50-day moving average earlier this week with no success.

“Price action seems to be consolidating near 2,570.00 points with the 50-day moving average and 100-day moving average offering resistance near 2,579.00 points. Support has formed near 2,557.35 level.”

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