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Billionaire Pulls Dubai IPO as Sale Drought Prompts Bank Cuts

Dec. 18 (Bloomberg) -- Al Habtoor Group LLC, controlled by billionaire Khalaf Al Habtoor, delayed an initial share sale in Dubai as trading volumes fail to rebound in the Persian Gulf business hub.

“After a thorough evaluation I have decided to postpone the IPO,” Al Habtoor said in an e-mailed statement. “It is a moral issue not taking the group public at this time.” Grant Thornton valued the company at 22 billion dirhams ($6 billion).

Trading volumes in Dubai remain near a six-year low even as the benchmark DFM General Index climbed 17 percent this year, making it the best-performing equity gauge in the Persian Gulf. Global banks are trimming staff amid the slump, with Nomura Holdings Inc. and Credit Suisse AG among those cutting their investment banking divisions. Shuaa Capital PJSC, controlled by Dubai ruler’s company, is closing its retail brokerage as business dries up.

Arab uprisings that ousted leaders in Tunisia, Libya and Egypt and the debt crisis in Europe have slowed regional share sales in the past two years. Money raised from IPOs in the Middle East and Africa fell to $5 billion this year and $4.8 billion in 2011 from $22 billion in 2008, data compiled by Bloomberg show.

Axiom Ltd., a Dubai-based phone retailer, in 2010 canceled plans to raise about $100 million because of “widespread concerns about market conditions and liquidity.” Topaz Energy & Marine Plc, a Dubai-based oil and gas services company, in March last year pulled an IPO in London, citing “uncertain investment climate for new issues.”

Waldorf Astoria

Al Habtoor, which is developing the Waldorf Astoria on artificial islands off Dubai’s coast, has investments in the hotel, automotive and real-estate industries and has a joint venture in the Middle East with Leighton Holdings Ltd., Australia’s biggest builder. Earnings are forecast to climb 16 percent this year to more than 700 million dirhams after investments of 5.9 billion dirhams in the hospitality industry, according to the company statement today.

Grant Thornton’s valuation excluded two hotels, a shopping mall and a theme park in Lebanon as well as Le Meridien Budapest in Hungary, Al Habtoor said. It also excluded the value of shareholding in Habtoor Leighton Group and several other investments in public shareholding companies.

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