Marka IPO opens today, expected to see huge turnout
dubai — Marka’s initial public offering (IPO) today, which is the first IPO on the Dubai Financial Market (DFM) since 2009, is expected to oversubscribe by several times, according to industry specialists.
The Dubai bourse benchmark index has nearly tripled since the end of 2012 and that suggests Marka may see strong investor demand. Last month Nasdaq Dubai saw its first IPO since the global financial crisis and Emirates Reit was oversubscribed by 3.5 times.
There are a number of reasons for the oversubscription of this IPO for at least five times, they said, adding that this is the first retail company which will be listed on the Dubai’s main bourse, and the retail sector is one of the best performing sectors in the UAE. In addition, the IPO is open to all nationalities and every applicant will be entitled to own shares.
The minimum subscription is 5,000 shares at Dh1 a piece, plus a premium of three fils per share. Any subscription exceeding this minimum shall be in multiples of 1,000 offer shares. If the number of shares subscribed surpassed the number of shares offered, stocks will be allocated to subscribers by pro-rata. Marka, cre- ated by prominent businessmen in the UAE, is offering for sale a 55 per cent of its capital, or 275 million shares, at Dhs1 in a 12day sale beginning today. The company is planning to spend the proceeds on opening more than 100 fashion stores, restaurants and cafes across the Gulf region over the next five years.
Jamal Al Hai, chairman of the Founders Committee, said: “We have adopted the concept of proportionality in the allocation as a fairer method because it allows all subscribers to get an allocation as per the percentage of their subscribed amount out of the total subscription. This concept will make sure that no subscriber is denied a subscription, regardless of the number of shares he has subscribed to. It also takes into account the interests of small and large investors alike, considering not more than five per cent of shares will be allocated to a single subscriber.”
Subscription banks have made preparations to meet the expected high turnout through the allocation of work teams in the branches that are receiving subscription applications. The subscription, which will continue until April 24, will be carried out through selected branches of eight banks and financial institutions, namely National Bank of Abu Dhabi, Union National Bank, Abu Dhabi Commercial Bank, Dubai Islamic Bank, National Bank of Fujairah, Commercial Bank International, Finance House, and the Islamic Finance House.
Al Hai explained that in case of oversubscription, the shares will be proportionately distributed to the subscribers. Allocation shall be to the nearest complete share provided that none of the shareholders, as a result of the allocation, be deprived of participating in the company irrespective of the number of shares subscribed.
Marka will be the first public shareholding company operating in the UAE’s retail sector and food and beverages (F&B) sectors. It seeks to establish itself as a leader in the retail and F&B markets in the GCC. It will introduce to the regional markets innovative global brands and concepts in the fields of fashion, restaurants and cafes.