Tags: ML | Dubai | Axiom | Telecom | IPO | initial | equity

Axiom Telecom Aims to Raise $382 Million in IPO

Sunday, 21 Nov 2010 06:03 PM

Mideast mobile phone retailer Axiom Telecom is seeking to raise as much as $382 million in the United Arab Emirates' first initial stock offering this year.

The Dubai-based company said Sunday it plans to float up to a 35 percent stake next month, with shares being offered to institutional investors at a price of 80 cents to $1.15 apiece. At those rates, Axiom as a whole would be worth $760 million to $1.09 billion.

Unlike past stock sales in the Gulf, small-time retail investors won't be able to participate in the initial public offering. Chief Executive Faisal al-Bannai said that and an "extremely attractive" offering price should help the company generate sufficient interest among banks and big institutional buyers such as investment funds.

Those IPO investors stand to gain if the share price jumps once retail investors have a chance to buy as the stock begins trading.

"We want to make sure we leave something on the table for the investors," al-Bannai said. "More importantly, we want to make sure we have a very successful aftermarket trading once the share is public."

Axiom sells cell phones in the UAE, Saudi Arabia and other Gulf Arab countries. It also has stakes in mobile handset companies in India and South Africa.

It is controlled by family firm al-Bannai Investment, which currently holds a 53 percent stake. Dubai Holding, a conglomerate owned by Dubai's ruler that is struggling to restructure billions of dollars worth of debt, owns 40 percent. Private firm al-Zarouni Enterprises owns the rest.

Existing investors will cash in by having their stakes reduced by the same percentage depending on the number of shares sold. Axiom is also issuing 93 million new shares out of as many as 332 million being offered in the IPO.

Axiom plans to spend the next two weeks pitching its shares to investors in the Gulf, Europe and the U.S. The company is touting its strong market share and growth potential in a young and affluent part of the world.

It says it distributed two-thirds of the handsets by value in the UAE in the first half of the year, and controls more than half the market for lucrative smart phones in both the UAE and Saudi Arabia, the Arab world's two largest economies.

A banker involved in the sale said he expected the sale would generate "significant interest" from buyers in those two Gulf countries, and that drumming up enough demand wouldn't be a problem. He spoke on condition of anonymity because the sale is ongoing.

Axiom expects trading to begin around Dec. 9 on the Nasdaq Dubai, one of two stock exchanges in the city-state.

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