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UAE Freezones Biz News Updates
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Dubai retailer Paris Gallery plans IPO
Dubai group Paris Gallery, which stocks a $300,000 perfume among its luxury
products, is planning an initial public offering it said would provide a
"safety net" for the family-owned business and help it expand beyond the
Gulf.
Chief executive Mohammed Al-Fahim told the Reuters Retail and Consumer
Summit that the firm, which had 2011 turnover of about $1 billion, had held
talks with the Dubai Financial Market DFM.DU and sister bourse Nasdaq Dubai
about a potential listing.
"I would not put a timeframe but, as an objective, I say yes, for the
benefit of the organization in the future. One of the rationales (of an IPO)
would be the continuity of the company," said Fahim, whose father founded
the firm.
"Globally, family businesses rarely last beyond the second or third
generation. So, an IPO is a sort of safety net for us to make us more
transparent, more structured and more accountable."
Fahim would not comment on the likely value of the IPO or what size stake
the firm might sell - the Nasdaq Dubai and DFM have different listing
requirements. The fear of losing control and being opened up to greater
scrutiny has led many family-owned retail businesses to seek other ways of
raising money.
Dubai's retail and hospitality sector accounted for 34.7 percent of the
emirate's economy in 2011, more than real estate and financial services
combined, which themselves make up the bulk of the weighting on the DFM
share index .DFMGI.
This has led to a disconnect between the bourse - down 75 percent from a
2008 peak following a property price crash that also roiled lenders - and
the wider economy, which grew 3.4 percent last year.
Dubai has not completed an IPO of note for more than four years. Paris
Gallery's plan followed an announcement last week from Al Habtoor Group, a
family-owned Dubai conglomerate, that wants to raise $1.6 billion through an
IPO next year.
BEYOND GULF
Fahim said Paris Gallery would expand outside its Gulf base where it employs
3,500 across 80 stores.
"We are studying Europe and the Far East. We are in the middle of
negotiations to open new stores in Iraq, Turkey, Moscow, St Petersburg and
many other cities among the Arab world."
Half the company's stores trade under the Paris Gallery label, selling about
500 brands including Chanel, Dior (DIOR.PA), Yves Saint Laurent and Lancome.
Also on display is Imperial Majesty No. 1 perfume, a creation by Clive
Christian Perfumes of which only 10 bottles were made. Each bottle is priced
at over $300,000.
The remaining stores are franchises for the likes of Burberry (BRBY.L),
Cartier, Ferrari and Roberto Cavalli.
"We expect to grow (revenue) more than 10 percent this year," he said. "In
2009, we did some consolidation. 2010 was better, 2011 was our best ever
year," Fahim said.
The UAE provides more than 60 percent of Paris Gallery's revenue and Saudi
Arabia about 35 percent, with the remainder from other Gulf countries. |
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Courtesy Thomson Reuters
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