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Why the Axiom IPO matters
It’s the first UAE IPO for almost two years, and it will tell us an awful lot about the strength of the recovery. Here’s why.
November 28, 2010 1:04 by Samuel Potter
Initial reactions were cautious; the National carried a quote from Ameed Kanaan, the general manager at Al Jazeera Financial Services, who said, “Before we go down the IPO route we have to be fully covered [in our markets]. It doesn’t make sense to launch IPOs on a sick market because the company will become sick too.” The article points out that confidence in the local market has been poor in recent weeks.
Perhaps that is why Axiom has decided to exclude retail investors from the sale, pitching the IPO at institutional investors only. The company decided on the move after the Omani Qatari Telecommunications Co was forced to extend its IPO in a bid to attract more retail investors.
“Retail investors can come in the secondary trading and drive more value to the share price,” said Axiom’s Chief Executive Faisal Al Bannai. It remains to be seen how this will play out – some argue that retail investors create the liquidity and interest for larger investors, and without them the IPO could struggle. Axiom clearly decided this was the smaller risk.
As a mobile phone distributer, Axiom dominates the UAE market and has a healthy share of the Saudi market. According to the Wall Street Journal, it had revenues of $1.36 billion last year. The company will no doubt hope to see the IPO well received, having watched General Motors in the US make IPO history this month thanks massive demand.
Kipp will be among those watching closely.
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