x Abu Dhabi, UAEWednesday 24 January 2018

Emaar shareholders set for Dh9 billion windfall as malls unit to list on the Dubai Financial Market

At least 15 per cent of Emaar Properties shares will be sold on the DFM, after a book-building exercise by international banking advisers.

More than 75 million visitors flocked to Emaar’s The Dubai Mall last year. Pawan Singh / The National
More than 75 million visitors flocked to Emaar’s The Dubai Mall last year. Pawan Singh / The National

In the biggest event in the UAE equity markets since 2007, Emaar Malls Group, the retailing arm of the region’s largest property developer, will launch an initial public offering of shares on the Dubai Financial Market this month, with trading in the new stock expected to begin in October.

The shares of the owner, Emaar Properties, itself owned 30 per cent by the Government of Dubai, leapt 8.8 per cent on the DFM on the announcement. The proceeds of the IPO, estimated at a minimum of Dh5.33 billion, will be paid as dividends to existing shareholders.

At least 15 per cent of Emaar Properties shares will be sold on the DFM, after a book-building exercise by international banking advisers to determine the exact price. No new money will be raised in the exercise.

At the minimum size, it would imply a market capitalisation of EMG of about Dh35bn.

The final proportion sold on DFM could rise, depending on demand emerging during the book-building exercise, which has already begun. Markets had been expecting about 25 per cent to be sold.

Retail investors will be allocated 30 per cent of the IPO, with the rest going to investing institutions. Investors who hold shares in Emaar Properties on September 10 will be eligible for preferential allocation of 10 per cent of the issue, equal to a minimum 1.5 per cent of the company’s total market capitalisation.

Mohamed Alabbar, the chairman of Emaar, said: “The proposed IPO of EMG is a significant strategic step for Emaar Properties, allowing its shareholders to realise value from the malls business, while continuing to allow EMG to benefit from the development expertise and significant land bank of one of the largest developers globally.

“Additionally, the IPO of EMG is a milestone for the development of the UAE capital markets as, for the first time, it combines institutional and individual shareholders in the same offering on the DFM,” he added.

EMG’s biggest asset is The Dubai Mall, the most visited mall in the world with an estimated 75 million shoppers last year. Assets also included in the IPO are the smaller Dubai Marina Mall, about 30 smaller retail centres, the Souk Al Bahar entertainment complex in Downtown Dubai and the Gold & Diamond Park, the retail outlets for precious metals and jewellery.

Nasser Rafi, the chief executive officer of EMG, said: “Following the successful placement of our Dh2.8bn sukuk earlier this year, we view the IPO as a key milestone in establishing EMG as an independent company.”

Emaar has committed to paying a minimum of Dh9bn to shareholders by way of dividend, of which the main shareholder, the government-owned Investment Corporation of Dubai, would get the biggest share. It has already earmarked Dh3.7bn from an earlier refinancing.

The new quoted company will be run by an eight-person executive board, with five members chosen from the existing executive staff at Emaar and three new non-executives chosen from outside.

Mohammed Ali Yasin, the managing director of National Bank of Abu Dhabi Securities, said: “This is positive news for markets in the sense that at 15 per cent it is not so big that it will drain the secondary market. It is also positive that existing Emaar shareholders will get an allocation.”

Emaar has hired a large group of advisers for the IPO. Three American banks – Merrill Lynch International, JP Morgan and Morgan Stanley – are joint global coordinators, and they are joined by EFG Hermes, Emirates Financial Services, HSBC Middle East and National Bank of Abu Dhabi as joint book runners. Rothschild is the investment bank adviser for the offering. Emirates NBD and NBAD are the lead receiving banks.

Investors seeking more retail-focused publicly traded companies can also look forward to the listing of Marka shares next month.

Marka has appointed a chief executive as the Dubai firm that held an IPO in April seeks to list its shares on the DFM next month.

McArthur Glen’s UK country manager, Nick Peel, will join as the chief executive, Marka said yesterday.

Investors committed Dh10bn at Marka’s public share sale, Dubai’s first in five years, making it 36 times oversubscribed.

Unfavourable market conditions after Dubai’s equity index declined more than 10 per cent in the second quarter could have been a factor in the delay of the listing, according to analysts. Marka’s plan is to use the IPO money to build a presence in the retail, luxury and restaurant business in the Arabian Gulf.

* with reporting by Hadeel Al Sayegh and Andrew Scott


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