x Abu Dhabi, UAE Thursday 20 July 2017

Emaar set for $9bn DFM flotation mid-September

Advisers to the IPO say about 25 per cent of the malls division will be put up for sale in a further boost to UAE stock markets.

Visitors observe the sealife in the Dubai Mall aquarium.  Lauren Lancaster / The National
Visitors observe the sealife in the Dubai Mall aquarium. Lauren Lancaster / The National

Emaar Properties, the developer of the Dubai Mall, will float its malls division on the Dubai Financial market in a Dh9bn initial public offering as early as the middle of next month, in a move that will be a further boost to UAE stock markets.

Advisers to the IPO say about 25 per cent of the business will be put up for sale on the local market, increasing the capitalisation of the DFM by about 10 per cent at a stroke and enhancing the liquidity of Dubai’s main market for retail investors.

The IPO will be the biggest on any UAE market since the listing of DP World in late 2007, and will be the centrepiece of a busy post-summer period for UAE markets.

Already Emaar’s rival property group, Damac, has pledged to list shares on the DFM in the next few weeks, while Marka, the country’s first greenfield IPO, backed by some of the wealthiest investors in the Arabian Gulf, is also scheduled to begin trading then.

One big Abu Dhabi business is also believed to have advanced plans for a stock market debut.

But Emaar’s flotation of its malls unit — centred on The Dubai Mall’s flourishing business — will be a step change. It will be marketed to global institutions just as much as local investors and will raise the profile of UAE markets around the world in the first major flotation since the country started trading as an emerging market in June.

Emaar has hired seven investment banks — including big American institutions such as JP Morgan, Bank of America and Morgan Stanley — to market the IPO to international investors, and four banks with a big regional presence, including Emirates NBD and National Bank of Abu Dhabi, to act as “bookrunners” for the issue. Their job is to help set the pricing of the IPO.

Rothschild is the main financial adviser to the flotation.

One adviser, who requested anonymity because some details of the IPO are still under discussion, said: “They do not really need so many banks but it’s an important event and they want to make sure it is successful, with a global audience as well as regionally. It’s the biggest thing for years in Gulf markets.”

Emaar, under the chairman, Mohamed Alabbar, believes the flotation will increase the aggregate value of the business by putting a market price on the most consistent earner within its overall operations. Malls and retailing are regarded as less prone to cyclical turns in the property market than the rest of the Emaar operations.

In the first quarter, Emaar’s shopping malls, leisure, and retail and hospitality businesses together earned Dh1.346 billion, or nearly 60 per cent of the company’s total revenue.

Bankers are still working on the level of preferential allotment of shares to existing holders of Emaar equity. Some shares will be reserved for current shareholders, but with such big global demand expected that level is yet to be decided.

Under a deal worked out with UAE market regulators, Emaar will be able to retain at least 70 per cent of the equity in the malls business. Emaar shares have recovered during the past month, along with the rest of UAE equities, after a period of volatility that wiped a quarter of the value off of shares in Dubai.


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