Dubai's Topaz pulls out of London IPO

The first post-recession listing in London of a Gulf-based oilfield services company has become a casualty of Middle East unrest.

Renaissance Services, the parent of Topaz Energy and Marine that is listed in Muscat, said yesterday it had pulled the planned US$500 million (Dh1.83 billion) initial public offering (IPO) of Topaz shares on the London Stock Exchange.

The IPO was expected to make Topaz, based in Dubai, eligible for inclusion in the FTSE250 index.

"Given the increasingly uncertain investment climate for new issues caused by international events, the board of Renaissance has decided, at this point, not to proceed with the pricing of the initial public offering until market sentiment is more settled," the company said.

The Renaissance chairman Samir Fancy said the company hoped to list shares in Topaz when the climate was right.

"In the meantime, we will continue to implement our strategy of growing the business in what continue to be fundamentally strong markets," Mr Fancy said.

Analysts said Topaz faced an uphill battle to attract investors amid stock market volatility stirred by political unrest in the Mena region, and the earthquake, tsunami and nuclear crisis in Japan.

"Given the recent crisis in the Middle East, we believe it has been hard for Topaz to attain such a valuation and thus would have resulted in any new equity injection being dilutive to current shareholders," said the investment bank EFG-Hermes.

Topaz operates a fleet of work boats for servicing offshore oil rigs in the Gulf and Caspian Sea, and provides engineering services to offshore oil and gas producers.

It was trying to finance the expansion of its operations into deepwater oil basins off Brazil and West Africa. Last month, Topaz agreed to acquire two offshore supply vessels in Brazil for $40.4m.

The cancelled offering was expected to be priced at between 170 and 230 pence a share, resulting in a market capitalisation of about £1bn (Dh5.91bn), based on a listing of up to 40 per cent of Topaz's share capital.

It was thought the offering might proceed due to the strong near-term outlook for oilfield services worldwide, as many producers scramble to increase production capacity to meet rising global oil demand.

Banking sources said the decision to drop the deal flowed from a lack of interest from institutional investors, who did not completely cover the order book for the deal.

JPMorgan and Bank of America Merrill Lynch were the bookrunners for the planned Topaz offering.

Several other IPOs have been cancelled or postponed in recent months because of market volatility. The French media company Lagardere has postponed an offering for its pay-TV unit Canal Plus France.

And the UAE mobile phone distributor Axiom Telecom last December shelved plans for an IPO on the Nasdaq Dubai exchange.

tcarlisle@thenational.ae