UPDATE 2-Dubai family firm Al Habtoor postpones flotation

Mirna Sleiman and Dinesh Nair
Reuters Middle East

* Was planning to raise $1.6 bln from 25 pct IPO

* Says Grant Thornton valued firm at $6 bln

* Several banks pitched for IPO mandate - source

(Recasts lead, adds details, analyst quote)

DUBAI, Dec 18 (Reuters) - Al Habtoor Group, one of Dubai's

leading family-owned firms, has postponed plans to raise as much

as $1.6 billion in a move blamed by analysts on unrealistic

price expectations for its stock.

The company, whose operations span the hospitality,

construction, education and automotive sectors, in September

announced plans to float a quarter of its shares in an initial

public offering on the Nasdaq Dubai bourse next year.

It said it wanted to use the proceeds to acquire hotels in


"There was a sharp discrepancy between what the group was

expecting (in terms of price) and the reality of the underlying

market here, a senior banking source said on Tuesday, adding

several international banks had pitched for the IPO mandate.

"It is a wise move to back off if you are not really sure

whether it can be pulled off.

"The equity markets are lacklustre globally and out in the

region, there has been a major slump since the crisis," the

source said, declining to be identified because of the

sensitivity of the matter.

The Dubai-based company, which bought a small stake in

Barclays in 2008, is one of the UAE's biggest family

businesses and a stock market float from the group was seen

adding momentum to local equity markets which have struggled to

attract new companies since the global financial crisis.

Chairman Khalaf Al Habtoor said advisory firm Grant Thornton

had valued the group at $6 billion, excluding some of its hotel

and shopping mall assets and its ownership in the joint venture

with Australian group Leighton Holdings.

"I will continue to focus on best practice and growing the

company in a sustainable way," he said.

Market volatility and a reluctance among retail investors,

burnt by the collapse in stock prices in the crisis, have been

cited as factors behind the lack of new public offerings in the

Gulf Arab region.

The last listing on the Dubai benchmark was Drake & Scull

in March 2009, while the Abu Dhabi index has only seen

a couple of minor sales since 2008.

"Our house view is that conditions for IPO will be more

conducive in 2015. The reason for postponing the IPO would be

current market conditions and a lack of liquidity," Shehzad

Janab, head of asset management at Dubai-based Daman Investment


After months of inactivity, Europe has seen a pick-up in

share sales since September, but the market is far from robust

and investors remain choosy about which firms they will back and

at what price.

Russian mobile operator MegaFon priced

its offering at the bottom of its range in November, while

Italian airport operator SEA scrapped its listing.

Al Habtoor said the group's full-year earnings are expected

to grow 16 percent to 700 million dirhams ($190.58 million) and

that it has made investments worth 5.9 billion dirhams in the

last year in the hospitality sector.

($1 = 3.6730 UAE dirhams)

(Additional reporting by Nadia Salem; Editing by Dan Lalor and

David Cowell)

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