CEO sees year revenue growth of more than 10 per cent
Dubai: Dubai group Paris Gallery, which stocks a $300,000 perfume among its luxury products, is planning an initial public offering it said would provide a “safety net” for the family-owned business and help it expand beyond the Gulf.
Chief executive Mohammad Al Fahim told the Reuters Retail and Consumer Summit that the firm, which had 2011 turnover of about Dh1 billion ($272 million), had held talks with the Dubai Financial Market and sister bourse Nasdaq Dubai about a potential listing.
“I would not put a timeframe but, as an objective, I say yes, for the benefit of the organisation in the future. One of the rationales (of an IPO) would be the continuity of the company,” said Fahim, whose father founded the firm.
“Globally, family businesses rarely last beyond the second or third generation. So, an IPO is a sort of safety net for us to make us more transparent, more structured and more accountable.”
Fahim would not comment on the likely value of the IPO or what size stake the firm might sell — the Nasdaq Dubai and DFM have different listing requirements. The fear of losing control and being opened up to greater scrutiny has led many family-owned retail businesses to seek other ways of raising money.
Dubai’s retail and hospitality sector accounted for 34.7 per cent of the emirate’s economy in 2011, more than real estate and financial services combined, which themselves make up the bulk of the weighting on the DFM share index.
This has led to a disconnect between the bourse — down 75 percent from a 2008 peak following a property price crash that also roiled lenders — and the wider economy, which grew 3.4 per cent last year.
Dubai has not completed an IPO of note for more than four years. Paris Gallery’s plan followed an announcement last week from Al Habtoor Group, a family-owned Dubai conglomerate, that wants to raise $1.6 billion through an IPO next year.
Fahim said Paris Gallery would expand outside its Gulf base where it employs 3,500 across 80 stores.
“We are studying Europe and the Far East. We are in the middle of negotiations to open new stores in Iraq, Turkey, Moscow, St Petersburg and many other cities among the Arab world.”
Half the company’s stores trade under the Paris Gallery label, selling about 500 brands including Chanel, Dior , Yves Saint Laurent and Lancome. Also on display is Imperial Majesty No. 1 perfume, a creation by Clive Christian Perfumes of which only 10 bottles were made. Each bottle is priced at over $300,000.
The remaining stores are franchises for the likes of Burberry, Cartier, Ferrari and Roberto Cavalli.
“We expect to grow (revenue) more than 10 percent this year,” he said. “In 2009, we did some consolidation. 2010 was better, 2011 was our best ever year,” Fahim said.
The UAE provides more than 60 per cent of Paris Gallery’s revenue and Saudi Arabia about 35 per cent, with the remainder from other Gulf countries.