Anticipated IPO of UAE property lister Dubizzle postponed

Dubai-based real estate lister Dubizzle Ltd. has postponed its initial public offering (IPO) a day before the bookbuilding was set to commence.

Dubizzle, an online classifieds platform, allows users to buy and sell goods, services, and property, primarily in the Middle East and North Africa (MENA) region

In a statement on Wednesday, the company said it will “assess optimal timing for the offering in the future”.

Last week, the company announced plans to float 1.25 billion ordinary shares or 30% of its shares on the Dubai Financial Market, according to Bloomberg. It will include new shares issued by the company as well as the existing ones offered by current shareholders.

An analysis by Data Darbar, which covers the tech and start-up sector, said only 1.57% of the shares floated by the company were new equity, while the remaining 84% were being sold by existing shareholders.

'Mismatched expectations'

The company’s decision to pull out of the IPO is being linked to the lackluster performance of recent listings in the United Arab Emirates.

State-backed contractor Alec Holdings PJSC, which listed last week, and the country’s two largest IPOs over the past 12 months — Talabat Holding Plc andLulu Retail Holdings Plc — are currently trading below their offer prices.

Mutaher Khan, the founder of Data Darbar, said post-trading price movements shouldn't be too relevant to Dubizzle’s IPO since most shares floated by the company were secondaries.

According to Khan, there could be three possible reasons for the company’s decision to pull out of the IPO.

The first is issues with book building i.e., there may not be enough demand for the company's shares among investors, and the total quota of 1.25 billion shares didn't receive the bids.

Secondly, it's also possible that the shareholders were looking at a certain price point to exit at, and the offers they received were probably lower than their expectations. Selling shares at a lower price would’ve brought down both their personal cashout and the overall valuation for the company.

Thirdly, post-listing price uncertainty may have made the company apprehensive about the potential value they'd like to signal to the market.

Nishit Lakhotia, head of research at SICO Bank, also told Bloomberg that the postponement likely stems from a mismatch in valuation expectations.

“Companies have to leave something for the IPO investors in terms of headroom and also future growth expectations should look more realistic,” he said. “Markets look more mature now and will punish IPOs that do not stick to these two factors.”

Bloomberg News previously reported that the offering could value Dubizzle at about $2 billion.

According to Data Darbar, Dubizzle has raised around $470 million since its inception. It is backed by Prosus, which owns a quarter of Tencent, and Affinity Partners, run by Jared Kushner, the son-in-law of US President Donald Trump.