Emaar shares yesterday surged to their highest level since the global financial crisis after it emerged that the developer had instructed investment bank Morgan Stanley to advise on plans for a secondary listing in Dubai and London.
Plan for Nasdaq Dubai and London listing of retail unit lifts Emaar shares
Emaar stock surged yesterday after the developer disclosed plans to choose Nasdaq Dubai and London to list its retail operations.
Emaar shares rose by 5.08 per cent to close at Dh9.75 – their highest level since August 2008 – after the chairman Mohamed Alabbar said in an interview that Emaar planned to seek a dual listing of the secondary issue on Nasdaq Dubai and in London. It has hired Morgan Stanley to advise on the listings. The company’s stock has gained more than 12 per cent since the start of the week.
When it announced its intention to press ahead with long considered plans to list some 25 per cent of the company’s retail and malls division with a value of Dh8 billion to Dh9bn.
It comes a week after Emirates REIT said it planned to raise at least Dh500 million in what would have been the first initial public offering on Nasdaq Dubai since 2008.
Nasdaq Dubai declined to comment.
Mr Alabbar said that Emaar was hoping to complete the listing before Ramadan, which starts late in June and that the developer was considering appointing a local bank as additional adviser on the plans, Bloomberg reported yesterday.
“Emaar is considering the options of various listing venues including Dubai and London stock markets,” an Emaar spokesman told The National. “Morgan Stanley was appointed to provide inputs relating to developing a strategy for the initial public offering of malls. The banks for the purpose of IPO management are still being appointed.”
A secondary offering is the sale of new stock from a company that has already gone public.
“The market has strongly reacted to the news,” said Sebastien Henin, head of asset management at The National Investor, an Abu Dhabi-based boutique investment bank. “London is the major stock market for emerging market companies, and by listing in London Emaar is likely to attract a greater pool of investors.”
“But from a liquidity perspective the dual listing could be a bit challenging,” Mr Henin added. “It could mean that the pool of stock available on each market is not so big and so there may have to be a mechanism to enable investors to transfer stock.
“The liquidity on the Nasdaq Dubai market is not so great, even for big companies listed there like DP World and so we think that perhaps the decision to go for a dual listing there had some political motivation.” Emaar’s malls business comprises more than 5.8 million square feet in Dubai and includes The Dubai Mall, one of the largest shopping centres in the world, as well as Souk Al Bahar and the Gold & Diamond Park.
Emaar’s decision to list in London comes less than four months after fellow Dubai property company Damac listed on the London Stock Exchange priced at US$2.65bn. Damac listed in London using global depositary receipts,which each represent three shares in a holding company controlled by the Damac founder and executive chairman Hussain Sajwani.
On Monday Emaar announced that rental revenue from leased properties increased 20 per cent in 2013 to Dh3.3bn while revenue from apartment and villa sales rose by more than 40 per cent to Dh4.9bn.
The Dubai Mall’s retail outlets recorded a 26 per cent rise in sales last year compared with 2012, the company said. According to market estimates, more than 50 per cent of all luxury goods sold in Dubai are purchased at the mall.
Emaar said on Saturday that it would also consider listing other subsidiaries “as and when appropriate”. The company is understood to be looking at various other divisions as potential float candidates, including the company’s hospitality division and its Egyptian operation.
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