Dubai-based Zafco Holding, a diversified tyre distribution and manufacturing company, plans to tap the capital market with a Dh700 million initial public issue next year.
This will be one of the first family-owned businesses to go public.
Listing is planned on the Nasdaq Dubai, Luxembourg and Singapore bourses, said Zafco CEO Gopiraj KV.
The company is now valued at Dh500m and by the time it is ready for approaching the capital market, sales will have reached Dh3.67 billion from the current Dh1bn, Gopiraj said.
Until 2012, Zafco plans new acquisitions and joint ventures across Asia and the Far East with operations that have a proven track record of quality and efficiency. The acquisitions are planned in Malaysia, Thailand and Indonesia as raw materials, particularly natural rubber, is available in abundance.
"We have planned huge investments for our expansion and acquisitions. At least 40 per cent of the financing will be met through our internal resources. For our acquisitions also we need funding. So we are plannig a public issue sometime next year. We are looking at the options of listing in Singapore, Luxembourg and Dubai," added Gopiraj.
In Dubai, the listing will be on Nasdaq Dubai.
The proceeds of the public issue will be used for diversification of its activities including acquisitions and expansion of manufacturing.
Zafco was established in Dubai in 1993 and has grown into a Dh1bn company.
Over the years, the company has added batteries and lubricants to its portfolio, and also manufactures quality tyres in its own right under the Zeetex brand. It works closely with a network of over 800 global distributors across 85 countries.
"If we have the right acquisitions in Thailand, Malaysia and Indonesia, it will give us immense opportunity to service the United States market by virtue of the free trade agreements with these countries," Gopiraj said.
Zafco is also set to launch its own chain of premium quality retail outlets across the GCC.
The company plans to open 65 such outlets across the region by 2012, including 10 in the UAE.
"The plans follow consumer research conducted by us that revealed a gap in the market for a high-quality tyre fitting and automotive services experience." Gopiraj said. The company will also establish standalone units and shop-in-shop outlets with partners and brand networks.
By Bhaskar Raj
© Emirates Business 24/7 2010
