Abu Dhabi's Eshraq Properties has applied for a secondary listing on Saudi Arabia's stock market as it plans to kick-start a number of major deals in the kingdom.
A listing on the region's biggest bourse would represent a first for a UAE company.
"We have been considering to enter the Saudi market for quite a while," said Jamal Al Saghir, the managing director at Eshraq. "We thought it was a good idea to do a cross-listing to introduce more people to the company, which would help in acquiring new projects in the country."
Eshraq is coordinating with the UAE market regulator - the Securities and Commodities Authority - as well as the Abu Dhabi Securities Exchange and the Saudi Tadawul All-Share Index. It has sent a letter to the Saudi regulator, the Capital Market Authority, requesting a cross-listing, Mr Al Saghir said.
The move follows the introduction of a series of regulations by the kingdom's market watchdog last year to entice foreign companies to list their shares there. The reform was regarded as a major step towards foreign ownership of Saudi-listed companies.
The Tadawul, the most liquid stock market in the region, has more than US$1.3 billion (Dh4.77bn) worth of shares traded daily. It has a market capitalisation of $624.4bn, with more than 150 companies listed.
Eshraq plans to start master developments in Riyadh and then expand to Dammam and Jeddah. It will develop villas, mixed-use buildings and hotels. The developer also plans to acquire some existing hotels.
"Saudi Arabia is a big market and the demand there is very high," Mr Al Saghir said. "We already have in our hand several projects, and we are just finalising the pricing. Once completed we will announce them immediately."
Eshraq's move comes as Saudi Arabia embarks on an ambitious mortgage law programme, expected to unlock one of the most lucrative sectors in the kingdom, where the population has quadrupled in 40 years.
The Saudi central bank in November introduced new regulations on property financing and leasing, the first step towards the creation of mortgage companies such as Dubai's Tamweel. The result would boost property borrowing to about $32bn a year, according to forecasts by Capitas Group International, a Saudi financing firm.
Eshraq began its operations in 2006 in Abu Dhabi, but its founding shareholders are mostly Saudi nationals. When it went public in 2011, Eshraq took the unusual approach of allowing investors to buy shares for a 25 per cent down payment, plus a fee of 0.02 fils a share.
The balance was scheduled to be due in two years at the discretion of the company's board of directors, Eshraq said at the time.
But it generated strong profits last year and suggested a dividend of 5 fils, with the remaining 17 fils to be paid out by the company towards shareholders' required balance.
If the company generates good profits this year, Eshraq will also carve out a portion of the income towards paying the remaining balance for investors to bring up the value of their shares to par value, said Mr Al Saghir. In the UAE, the par value of a stock is equivalent to Dh1.
"As a management, we as a company are trying to attain the highest amount of profit for our shareholders," Mr Al Saghir said. "We don't want to pressure them with paying the balance separately. We have the cash flow, the capability and excellent receivables and we feel comfortable putting that money towards their share value."
