Depa IPO priced low, avoiding DP World mistake
Posted on 19 April 2008 with no comments from readers
The UAE interiors contractor Depa Limited has priced its shares at $1.55 in its IPO, at the lower end of the $1.50-$1.85 price band announced to investors.
This decision should help ensure that the Depa IPO does not suffer the same fate as the $5 billion DP World IPO last November, which is still trading at a substantial discount to the issue price, leaving shareholders out of pocket.
Depa will still raise a very respectable $393 million from its IPO, and its shares will be listed on both the Dubai International Financial Exchange and on the London Stock Exchange as a GDR.
Oversubscribed
A statement said that more than $1.3 billion chased the 43 per cent stake sold by the Depa family owners, so the issue was more than three-times oversubscribed.
All eyes will be on the upcoming Future Pipes IPO on the DIFX to see if this success can be repeated, and how the market receives the new Depa shares when they are listed.
Certainly the recent emphatic statements about dirham revaluation – that it is not going to happen – have reassured investors in the DIFX which is a dollar-denominated stock exchange, and currency risk is not something that will trouble investors.
And the fact that the IPO launch price is at the lower end of the price band should mean that a modest premium is realized on this IPO.
no Comments posted by readers:
Sadly the Future Pipes IPO was pulled suddenly late last week. The Depa IPO stock opened at a discount and this did not go down well with investors. It looks as if the DIFX has once again short-changed investors, as with the $5bn DP World IPO last autumn. More focus on price discovery, and generosity to investors will be needed if Emirates Airline and Dubal are to float.