Why did Pakistani-founded Dubizzle Group postpone Dubai IPO?

Amid rumours that had abounded for many months, Dubizzle Group had finally announced on October 13 its intention to proceed with an initial public offering (IPO) and to list its ordinary shares for trading on the Dubai Financial Market (DFM), in a move that was expected to value the company at around $2bn. However, just over a week later, it said it was going to defer the listing.

“Since announcing its intention to float, Dubizzle Group has seen strong engagement and interest from investors, reflecting the company’s market leadership, profitability, and growth prospects across the UAE and Saudi Arabia. However, the company has decided to postpone its planned IPO and assess optimal timing for the offering in the future,” the Pakistani-founded company said in a statement.

“Dubizzle Group remains focused on executing its strategy of growing its highly profitable UAE business and expanding its footprint in Saudi Arabia,” it added.

Dubizzle Group is an online marketplace giant whose brands include the property website Bayut and the buying and selling platform dubizzle. It was founded in 2013 by Pakistani brothers Imran and Zeeshan Ali Khan, who also co-founded real estate portal Zameen.com in 2006 and currently own OLX Pakistan. A third brother, Haider, joined the venture in 2014.

Dubizzle Group and all its brands are focused solely on the MENA region.

According to Noor Nabulsi, Head of PR and Strategic Partnerships at Bayut & Dubizzle, “Dubizzle Group’s growth and success have always been driven by strong leadership, sound decisions and a clear vision for the future. The decision to postpone the IPO reflects the same thoughtful approach that has guided us from a small startup to one of the region’s most successful tech companies.”

In a LinkedIn post, she said “we trust our leadership and their commitment to making the best choices for the brand and for all stakeholders. This decision has been made with long-term value and stability in mind.”

“The IPO has been paused until further notice, and as always, we’ll continue focusing on building, innovating and delivering impact across our markets.”

So what do the experts say?

According to Joseph Dahrieh, Managing Principal at online broker Tickmill: “Dubizzle’s decision could have been affected by the risks of a potential valuation gap and underperformance after its trading debut.”

He told Business Recorder that “some recent IPOs saw price corrections after the stock listing and affected sentiment to a certain extent. These precedents created a climate of investor caution, making them potentially unwilling to accept the valuation Dubizzle was likely seeking.”

“This risk aversion was compounded by Dubizzle’s financials. The group reported a consolidated net loss. In a market that has globally pivoted from ‘growth-at-all-costs’ to demanding a clear path to profitability, the company could face hurdles. The decision, made just before the bookbuilding process was to begin, could suggest that feedback from investors was unfavorable,” he added.

Meanwhile, a report in the International Financing Review noted that “fears of weak trading were a key factor in Dubizzle’s cancellation, with investors drawing parallels to 2024’s listing of delivery business Talabat, which has fallen close to 40% from its issue price, and construction business Alec Holdings, which has fallen below issue since listing earlier this month.”

The report quoted a banker on the deal as saying that Dubizzle had a number of specific issues that investors had struggled with, such as a wide discrepancy between its adjusted and reported figures and the desire for investors to value its UAE operations separately from the lossmaking Saudi business.

On October 13, Dubizzle had announced our intention to offer 1,249,526,391 shares, representing 30.34% of total share capital.

The offering represented approximately 30.34% of the company’s total issued share capital, comprising both new shares to be issued by the company and existing shares to be sold by current shareholders.

The final offer price was to be determined through a book building process during the subscription period.

The subscription period was supposed to open on October 23 and expected to close on October 29 for UAE retail investors and professional investors, with pricing and allocation to professional investors expected on October 30.

Admission of the shares to trading on DFM was supposed to take place around November 6.

According to Imran, co-founder & CEO of the group, this IPO marks “an exciting new chapter for Dubizzle Group”.

At the time, Imran, co-founder & CEO of the group, had said that “by welcoming a broader shareholder base, we are positioning the group to accelerate growth, deepen our presence in the markets where we operate, and create long-term value for our users, clients, employees, and shareholders alike.“