Drake & Scull slumps on Dubai bourse debut

DUBAI // Shares of Dubai contractor Drake & Scull International slumped as much as 30 per cent below their initial public offering price on their Dubai bourse debut on Monday. The stock fell to as low as Dh0.7 (US$0.191) compared with the Dh1 price for which the company sold shares to the public last July, before regional stock markets sunk amid a global equities rout. More than 465 million Drake shares changed hands in the first two hours of trading with a value of more than more than Dh3.7 billion. Drake shares opened at Dh0.85 dirhams and closed at Dh0.74. "This was to be expected," said Haissam Arabi, chief executive and fund manager of Gulfmena Alternative Investment. "The stock was put on hold during a global financial crisis and the IPO evaluation cannot be the same as six months ago, when everything else has lost 70 per cent." Drake - which specialises in mechanical, engineering and plumbing businesses - is listing eight months after it raised around $322 million in an IPO. Since the IPO closed on July 17, Dubai's stock index has collapsed 71 per cent, while the emirate's property sector suffers from a sharp downturn in prices. About $335 billion of UAE construction projects have been put on hold, London-based MEED said this week. Drake & Scull said last month it was in talks to acquire contracting companies in Saudi Arabia and Qatar as it seeks to expand to weather the property downturn. This month, it said it expected net profit growth of up to 25 per cent this year and plans to spend as much as Dh500m on acquisitions. "It's catching up with the valuations in the market," said Rami Sidani head of investment for MENA at Schroders Middle East. "It's fundamentally a good company and rich in cash." While investors are booking immediate profits, Drake shares should pick up after the first wave of sellers leave the market, Arabi added. *Reuters