July 2 (Bloomberg) -- Damas International Ltd., the Dubai- based jeweler with stores in 18 countries, said it raised $270.6 million from an initial share sale to raise money for expansion after pricing the stock at the lower end of its indicated range.

Damas sold 270.6 million shares to institutional investors outside the U.S. at $1 each, valuing the company at $968.6 million, it said in an e-mailed statement today. On June 18 the company forecast a share price range of $1 to $1.14 each.

``The offer was oversubscribed and we sold about two-thirds in the Gulf and a third in Europe,'' Chief Executive Officer Tawhid Abdullah said in a phone interview. ``Because we're selling new stock rather than our holdings we felt $1 is a fair price and leaves something for our partners to trade.''

Gulf Arab companies had initial shares sales worth $4 billion in the first quarter, more than four times the value of IPOs a year earlier, Abu Dhabi-based Gulf Capital said in an April report. While the global credit slump triggered by U.S. subprime mortgage losses stymies debt markets, Middle Eastern companies are turning to equity sales to raise capital as their economies expand.

Sale managers Credit Suisse Group AG and HSBC Holdings Plc may buy a further 40.6 million shares at the offer price within 30 days of the company's listing on the Dubai International Financial Exchange, the statement said. The company is scheduled to list on the exchange on July 8.

``I think they are going to exercise their options,'' Abdullah said.

New Shares

Excluding the shares reserved for Credit Suisse and HSBC, 86.4 percent of the offering is new stock and 13.6 percent is being sold by Amwal al-Khaleej Commercial Investment Co., Damas said last month. The company's founding Abdullah family isn't selling any of its holdings.

Founded in 1907, Damas has 438 stores in the Middle East, South Asia, Europe and North Africa and had first quarter sales of 1.12 billion dirhams ($305 million) and net income of 69.7 million dirhams, the statement said. It sells its own gold and diamond jewelry, as well as products made by companies including Tiffany & Co. and Links of London.

Money raised from the IPO will be used to refinance some existing debt, fund acquisitions and help expand Damas's store network, Abdullah said. The company plans to add 131 new stores this year and a further 100 in 2009 to tap the Middle East and India's ``positive economic mood,'' he said.

As it seeks to attract regional oil wealth and become a global financial center, Dubai opened the Dubai International Financial Exchange in 2005. Nasdaq-traded NetSol Technologies Inc. on June 16 became the first U.S. company to dual-list on the exchange after Dubai's government bought a stake in Nasdaq OMX Group. DP World Ltd., the fourth-biggest container-port operator, in November raised $4.96 billion from the Middle East's biggest initial public offering before listing on the bourse.

To contact the reporters on this story: Will McSheehy in Dubai at wmcsheehy@bloomberg.net

Last Updated: July 2, 2008 04:56 EDT