Damas considers US$500m listing

UAE retailer Damas is poised for a US$500m listing on the Dubai International Financial Exchange, Arabian Business can reveal.

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By  Anil Bhoyrul Published  November 26, 2006

UAE retailer Damas is poised for a US$500m listing on the Dubai International Financial Exchange, Arabian Business can reveal. Senior sources have told the magazine that the jewellery retailer is in talks with bankers, and plans an IPO within the next six months. “It is something we have been thinking about and now we feel the time is right so we are moving forward,” a company source said. Last year, CEO Tawhid Abdullah raised the company’s capital by 40% to US$38 m after selling shares to four Gulf private investors, Shuaa Partners, Amwal al-Khaleej, a Saudi Arabia-based fund, the UAE’s Al Nasser Investments and the UAE’s Al Fahim family. The remaining 60% shares are held by the Abdullah family, which has controlled the company since it became a trading enterprise in 1959 – having opened its very first store back in 1907. Over the past two years, the company has grown into one of the region’s most successful jewellers. Last year the UAE-based jewellery retailer raked in around US$816m with US$40.3m in profit. The source said: “The figures speak for themselves, especially when you consider that the price of gold is currently at a 25 year high.” Earlier this year, in an interview with Arabian Business, Abdullah said that over the next ten years he was set on doubling the size of the company, in terms of staff, revenue and outlets. In the last 20 years alone, the firm has established its own diamond factories in Dubai, launched and developed hundreds of its own in-house brands, brought many exclusive first-time international brands into the market and opened up outlets in nearly every GCC country − as well as becoming the founding member of the Gold and Jewellery group in the GCC. “Within the next few years, we want to keep the foundation of loyalty we already have with our customers. Loyalty still comes first. That’s why sometimes we don’t go to expensive markets where the overheads are too high - yet we want to continue to give very good value for money to our customers,” explained Abdullah. “Currently 65% of our business is coming from inside the UAE, and 35% is coming from the outside. In five years time, I’d like 65% sales to come from outside the UAE and 35% from within the UAE,” he added. It is thought that Damas had first considered listing on the Dubai Financial Market last year, but were concerned over the regulatory requirements – including offering at least 55% of the shares to the public. This would see the founders surrender control of the company. However, Damas is now thought to prefer a DIFX listing given its requirements are designed to benefit more offshore based companies. With profits of US$40m, even a relatively small price/earnings ratio of 12 would put a US$500m price tag on the company, with extra funds likely to be used for overseas expansion. Nevertheless, some company sources say that any flotation could bring the value of the company nearer the US$1bn mark. Gold and jewellery sales in the UAE have been surging following the Eid and Diwali holidays last months, with Damas reporting that sales are up 60% on standard months, and are currently running at 23% higher than at the same time last year. The jewellery retailer expects diamond purchases to make up 30%-40% of sales. “Whichever way you look at it these are very good figures and they are only increasing. But what we want to do is expand and you need funds to do that." “We already have interests in a lot of countries, including the whole Gulf region, but we have shown in recent years that we are good enough to compete with any jeweller in the world. And that is what we intend to do. Going for a float will get us there,” says the company source.

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