05 April 2008

Kanoo says vanity driving IPO surge

Local family-owned businesses planning an initial public offering (IPO) are often ill-prepared for shareholder scrutiny, according to a Dubai business leader.

Mishal Kanoo, Deputy Chairman of Kanoo Group, said family businesses in the region tend to be driven to go public by the vanity of boasting an enlarged company from the raised capital.

“It is fashionable. People’s perception of the recipe for success is to go public. This is a wrong perception, unfortunately, that you have to go public to be massive,” Kanoo told Emirates Business on the sidelines of the 2008 World Summit on Innovation and Entrepreneurship (WSIE) in Dubai.

“In any company, specifically family businesses, if they decide to get public money, [they must] be ready for the public scrutiny that comes with it and a lot of them are not ready for that concept,” he said.

Kanoo added that it is more traditional firms that are reluctant to relinquish control. “This is an interesting phenomenon that family businesses are not used to, especially if it is a patriarch of a certain age. To get that person to accept that someone else is going to be questioning him is a very hard pill to swallow.”

New legislation from the UAE Government is expected to encourage more family businesses to go public, as it essentially lowers the amount they are forced to give up to investors.

Changes in the new Companies Law would allow local family-owned businesses that convert into public companies, to retain a maximum stake of 70 per cent and to list a minimum stake of 30 per cent, down from the current 50 per cent.

Nasser Al Shaikh, Chairman of Amlak Finance, recently said the changes resolve the main issue of family businesses’ opposition to going public, which is loss of management control.

Mahmood Ibrahim Al Mahmood, CEO of Al Qudra Holdings, said, the firm will raise $1.2 billion (Dh4.4bn) in an IPO after the new law is finally passed.

Last week, Lebanon’s Makhzoumi family, the owner of Dubai-based Future Pipes Industries, said it plans to sell about 35 per cent of its shares in an IPO, in a sale next month and list on the DIFX.

President and CEO Rami Makhzoumi told Emirates Business that the decision was setting a “critical” precedent to other family-owned businesses in the region.

“Unlike other exchanges in the region, the DIFX offers a minimum of a 25 per cent float. Many family businesses have no real intention to exit… and they have never had the opportunity to reap the benefits of being public without foregoing the majority of their business,” he said.

1 comment:

Anonymous said...

Now really...!
At least from what we've seen in all IPOs in the region, Future Pipe is the only company that has worldwide and global presence and enough strength to advance into such step. Talk about the other companies, not to name any, flooded with cash but only to be positioned as in local presence... that is "vanity"!
(Fred C.)

Lebanon Time-Line

Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

If you’re in the young, vibrant neighbourhoods of Gemmayzeh or Achrafiye, Beirut is about living for the moment: partying, eating and drinking as if there’s no tomorrow. If you’re standing in the shadow of buildings still peppered with bullet holes, or walking the Green Line with an elderly resident, it’s a city of bitter memories and a dark past. If you’re with Beirut’s Armenians, Beirut is about salvation; if you’re with its handful of Jews, it’s about hiding your true identity. Here you’ll find the freest gay scene in the Arab Middle East, yet homosexuality is still illegal. If you’re in one of Beirut’s southern refugee camps, Beirut is about sorrow and displacement; other southern districts are considered a base for paramilitary operations and south Beirut is home to infamous Hezbollah secretary general, Hassan Nasrallah. For some, it’s a city of fear; for others, freedom.

Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.