Dubai-based group Paris Gallery, which stocks a $300,000 perfume among its luxury products, announced that it is planning an initial public offering. It said that the IPO would provide a “safety net” for the family-owned business and would aid its expansion beyond the Gulf.
Chief executive Mohammed Al Fahim said that the company, which had 2011 turnover of about 1 billion dirhams ($272 million)is exploring the opportunities with the Dubai Financial Market and NASDAQ Dubai about a potential listing.
Mr. Al Fahim, whose father founded the firm, noted that one of the advantages of an IPO would be the continuity of the company. However, he didn’t say when exactly the listing will happen. He also added that family businesses usually don’t last beyond the second or third generation. That is why he believes that an IPO will make the firm more transparent, more structured and more accountable.
Mr. Al Fahim refused to comment on the likely value of the IPO or what size stake the company might sell since the NASDAQ Dubai and DFM have different listing requirements. Many family-owned retail businesses look for other ways of raising money because of fear of losing control and being watched more closely.
Dubai’s retail and hospitality sector accounted for 34.7 percent of the emirate’s economy in 2011, more than real estate and financial services combined.
Dubai has not executed an IPO of note for more than four years. The plan of the Paris Gallery came after Al Habtoor Group, a family-owned Dubai conglomerate, announced that it intends to raise $1.6 billion through an IPO next year.
Al Fahim pointed out that Paris Gallery would expand beyond the Gulf, where it employs 3,500 people across 80 stores. He added that the firm was in the middle of talks to open new stores in Iraq, Turkey, Moscow, St Petersburg and many other cities among the Arab world.
Half of the stores of the company trade under the Paris Gallery label and sell about 500 brands such as Chanel, Dior, Yves Saint Laurent and Lancome.
They also offer Imperial Majesty No. 1 perfume, which was created by Clive Christian Perfumes. Only 10 bottles were made of the latter and each of them is priced at over $300,000.
The rest of the stores are franchises for the likes of Burberry, Cartier, Ferrari and Roberto Cavalli.
Al Fahim believes that the firm will increase its revenue by more than 10 percent this year.
More than 60 percent of the revenue of Paris Gallery is generated in the UAE, about 35 percent by Saudi Arabia, and the remainder comes from the other Gulf countries.