Daman Investments, a Dubai-based investment management company, has put on hold plans for an initial public offer (IPO) of its shares, citing liquidity concerns.
Daman sold a 22.7 percent stake via a private placement in June, valuing the firm at 440 million dirhams ($120 million). It said it eventually planned to offer shares to the public.
The company had said in 2009 it would need about three years to prepare for a public listing, and might conduct the IPO by the end of 2012.
“We don’t feel this market is yet ready for an IPO. The liquidity in the market in not enough for an active primary market,” Shehab Gargash, chief executive of Daman, told reporters.
IPO activity in the UAE has been scarce since the global financial crisis. Market volatility and weak demand among retail investors, burnt by the collapse in stock prices from their pre-crisis peak, are cited as the main reasons.
In 2009, Daman said it had attracted a strategic investor who committed to invest 100 million dirhams in the company, and was moving ahead to secure additional equity investment of about 200 million dirhams.
But that fund-raising valued Daman at about 850 million dirhams -- nearly double the current valuation -- signaling the extent to which investment firms in the UAE have suffered in the global financial crisis.
Gargash said the company would continue with its other fund-raising plans.
“We are going ahead with the second round of fund-raising in which we are offering 800,000 shares,” he said, adding that he expected the new shares to fetch more than the 170 dirhams per share obtained in the previous round.
Dubai’s benchmark index is up over 15 percent year-to-date but trading volumes remain well below the 2008 peak.
Earlier this week the al-Habtoor Group, one of the biggest family-owned Dubai conglomerates, said it was looking to raise as much as $1.6 billion in an IPO on the Nasdaq Dubai bourse sometime next year.