Tristar pulls Dubai IPO as investors push back on valuation

Middle Eastern logistics firm Tristar Transport has pulled its initial public offering in Dubai, dealing a blow to the city’s attempts to revive the stock market.

Tristar has informed Dubai’s main bourse that the IPO has been withdrawn, CEO Eugene Mayne told Bloomberg in an interview. The deal was likely withdrawn “largely due to a mismatch in valuation expectations and investor education,” he said.

Tristar had set the price range for the offering at Dhs2.20 to Dhs2.70 per share. The firm was offering up to 24 per cent of its shares in the IPO, valuing it at as much as Dhs3.24bn ($882m), and the sale was scheduled to end on Thursday.

“We have strong cash flow and cash balances, we have capital for growth,” Mayne said, adding that the firm is not in a hurry to tap the IPO market again in the short term.

The deal’s collapse is another setback for Dubai’s stock exchange after the recent delistings of major companies. Tristar’s IPO would have been only the second listing in three years in the Middle East’s financial hub.

The bourse was already under pressure from shrinking volumes, with the total value of shares traded in the Dubai Financial Market at about $18bn last year. That put it far behind Saudi Arabia’s exchange, which saw $557bn worth of shares change hands in 2020, a jump of 137 per cent from the previous year.

Tristar’s valuation, on a relative basis, “is on the higher side — at upper range of the price band — when comparing with some of the global, regional peers in the logistics, transportation sector,” said Harshjit Oza, head of research at Abu Dhabi-based International Securities.

Tristar had initially planned to sell shares in London, but those plans were scuttled after a fraud at London-listed firm NMC Health revealed $6bn of hidden debt, increasing worries among global investors about governance and transparency issues at Gulf firms.

Bank of America Corp. and Citigroup Inc. are the global coordinators for the sale. First Abu Dhabi Bank PJSC, HSBC Bank Middle East Limited, Societe Generale SA and Kuwait Financial Centre KPSC are also involved in the sale. Moelis & Co is the financial adviser for the sale.

Tristar operates in 21 countries across three continents, and provides transportation and storage services to customers including Abu Dhabi National Oil Co., Total SA and Dow Inc.