Arkan IPO

[sharewadi]

ARKAN - Arkan Building Materials Company IPO - opened 07 May 2006

It's not clear in this report if Arkan will be listed on the Dubai Financial Market (DFM) or the Abu Dhabi Securities Market (ADSM). I wonder how popular this one will be with the negative sentiment prevailing in the market currently. Arkan shares are for UAE Nationals only.

Gulf News 07 May 2006:

Arkan Building's IPO lures small investors The Dh857.5 million IPO of Arkan Building Materials Company (ARKAN) opened yesterday, attracting mainly small investors, bankers said. They said the IPO is unlikely to affect market liquidity as big investors are few and would subscribe to only the minimum. "Due to the way the allocation of shares has been designed, big investors will subscribe to only the minimum and we are unlikely to see any massive over-subscription." The minimum application for offer shares has been set at 1,500 shares and no single individual UAE investor may be allocated more than 5 per cent of the company's total shares, after the offering.

Previous article (moved here from other topic about Agthia IPO)...

Gulf News 19 April 2006:

General Holding to start Dh857m IPO next month By Stanley Carvalho, Staff Reporter Abu Dhabi: The Abu Dhabi government-owned General Holding Company is privatising three companies via a Dh857.5 million initial public offering (IPO) slated to open early next month, officials revealed on Tuesday. The new company called Arkan Building Materials Company (ARKAN) is being created by merging Al Ain Cement Factory and two concrete block companies to form a single entity by raising capital through the offering, which is only for UAE nationals. "The government is selling the non-controlling stake (about 49 per cent) in these companies and the proceeds from the IPO will be used for development and relocation of the Al Ain Cement Plant to a bigger and new location in Fujairah," a top official involved in the privatisation told Gulf News. "This way privatisation is taking place via an IPO that will open in early May 2006 instead of selling existing shares. So it is a capital increase, not a sell-out," he said. Arkan is capitalised at Dh1.750 billion. In late 2004, GHC kicked off the privatisation of the Emirates Foodstuff and Mineral Water Company (AGTHIA) through a Dh294 million IPO. Arkan is now under the control of the General Holding Company (GHC) which was established in early 2004 to take over some six factories and plants owned by the now defunct General Industries Corporation (GIC). The shares are priced at Dh1.0 each plus 2.5 fils as issuance cost and there is a likelihood of the remaining 51 per cent stake in Arkan at a future date. Most leading banks in the UAE will act as receiving banks for the IPO. China National Building Materials Company has won the contract to build the factory in Fujairah. Production is pegged at 3.1 million tonnes per annum.

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[sharewadi]

I just read in Emirates Today that the Al Bayan newspaper reported on 27 Oct 2006 that Arkan Building Materials Company (ARKAN) expects to float its shares on ADSM by the end of November 2006.
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[sharewadi]

End of November 2006? Almost, only a month or so later. Arkan Building Materials (ARKAN) listed their shares today on the Abu Dhabi Securities Market (ADSM)...

The ARKAN IPO didn't seem to be talked about anywhere near as much as the Dubai Financial Market IPO (should be listed in a week or two), but there was a busy AED 37m worth of trading from 22.5m shares - almost a third of total value traded on ADSM.

A bit of a let down for investors I would guess with share price maxing out at 1.90 within the first minute or two of trading, falling to 1.60 after about 20 minutes and by 1030 it had bottomed out to 1.58 with very few interested buyers. Of the 22.5m shares traded, almost 90% went through in the first half hour of today's session.

At the end of the day there were 12m shares waiting in the queue to be sold and no buyers. Average was 1.66 today. Not quite up there with previous IPOs that floated at 3 or 4 times the par value previously. Looks like tomorrow could be limit down, closing price 1.50?

Par value is 1 dh and no foreign ownership allowed.

Press Release 08 January 2007:

Arkan lists its shares in AED 1.75 billion IPO on Abu Dhabi Securities Market Arkan becomes 61st company to list on ADSM Arkan Building Materials Company P.J.S.C (ARKAN), an Abu Dhabi based company, has today listed its stock of AED 1.75 billion (US$475.5 million) on Abu Dhabi Securities Market (ADSM). Arkan is the 61st company to be listed in Abu Dhabi and the ninth company in the construction sector. Arkan’s share capital is 1,750,000,000, issued at a nominal value of AED 1. The IPO was fully subscribed and the shares can be traded by UAE nationals only. The capital raised will be used by the company to finance future expansion of its portfolio businesses – the Emirates Cement Factory in Al Ain and the Emirates Concrete Block Factories in Al Ain and Mafraq, and their investment projects related to its core business. Arkan was incorporated on 15 January 2006 and is 51 percent owned by the General Holding Corporation (GHC), a corporation wholly-owned by the Government of Abu Dhabi. H.E Salem Bin Mohammed Al Dhaheri, Chairman of Arkan, said that all administrative and legal requirements had been finalised for the company’s stock to be traded on a daily basis, according to ADSM’s rules. Speaking on the first day of trading, he said: “Today’s listing is a landmark moment for Arkan. It will enhance our market position both locally and regionally and will secure our future growth. It will also open the door for UAE investors looking to diversify their portfolios.” Rashed Al Baloushi, Acting Director General of ADSM, welcomed Arkan to the market and highlighted the importance of IPOs to the long-term stability of the market: “We congratulate Arkan on their successful listing on our market today and look forward to working with them as they develop and grow. “As part of our best practices programme, we are encouraging more companies to list on our market. More IPOs will give investors further opportunities to diversify and therefore spread their risk. This will help to enhance market stability, which will attract institutional investors to Abu Dhabi,” he added. H.E Mr Al Dhaheri concluded by saying: “Arkan is already demonstrating its effectiveness by meeting new targets in the rapidly expanding UAE construction market. Having an established and secure base has made all the difference to our own rapid and efficient expansion.” H.E Mr Al Dhaheri thanked ADSM’s executives for finalising the necessary steps to trade Arkan’s stocks and said that he was looking forward to working with them in the future. About Arkan Arkan Building Materials Company P.J.S.C. (Arkan) was established on January 15 2006 for the purpose of owning and developing companies and businesses involved in the construction-related sector in the UAE. Its strategic objectives are to make further investments in these businesses and companies and in related businesses, and generally to trade, deal or engage in commercial activities that are core to the operations of the Portfolio Businesses and other subsidiaries.

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[sharewadi]

Since the daily limit is supposed to be 10% on any price movement on Abu Dhabi Securities Market, it's curious that they say the price was up 66% .

ESCA have obviously given the movement based on opening price rather than last closing price, since there wasn't a last closing price on the ADSM.

ADSM have based the change in movement on the par value which was the last price at which you could have bought Arkan shares, almost a year ago, however they were not available at ADSM at that price. Anyway, as the IPO price of the shares was 1 dh + subscription fees of 2.5 fils, ADSM should have said it was a 62% if they wanted to use that approach.

Arabian Business 09 January 2007:

Dispute over Arkan price movement by Anees Dayoub and Ben Flanagan The Abu Dhabi Securities Market (ADSM) and the UAE market regulator have disagreed on the share price movement of the newly-listed Arkan Building Materials Company (ARKAN). On Arkan's first day of trading yesterday, the Emirates Securities and Commodities Authority (ESCA) claimed that its shares fell by 5.14%, while the ADSM insisted that the price rose by 66%, according to today’s Al Khaleej newspaper. The former figure was calculated on a base price of AED1.75, while the ADSM calculated a price increase based on the nominal share price of AED1. Yeseterday Arkan shares opened at AED1.75 and rose to AED1.90, but quickly fell to AED1.58 before closing at AED1.66. Arkan - which has a share capital of AED1.750 billion - is the 61st company to be listed in Abu Dhabi and the ninth company in the construction sector. Its IPO was fully subscribed and shares in the company can be traded by UAE nationals only. Arkan was incorporated in January 2006 and is 51 per cent owned by the General Holding Corporation (GHC), a corporation wholly-owned by the government of Abu Dhabi.

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