Emaar Development, a unit of the UAE’s biggest listed developer Emaar Properties, has opened the subscription of its initial public offering (IPO), setting the pricing between Dh5.70 and Dh6.90 per share which will value the deal up to Dh5.52 billion ($1.5bn).
At the mid-point of the pricing range, Emaar Development's market capitalisation at listing would be approximately Dh25.2bn. The firm is offering 800 million shares, or 20 per cent of its share capital, for subscription to both retail and institutional investors, the company said in an emailed statement on Thursday.
The share float, the first significant equity capital markets deal to hit Dubai Financial Market (DFM) in three years, will be open for retail investors’ subscription between November 2-13 while the period of the subscriptions for the institutional investors is extended to November 15. Retail investors will be able to subscribe to 10 per cent of the offering, with the remaining 90 per cent reserved for institutional investors, including 40 million shares for the Emirates Investment Authority.
"We expect to see demand for it, especially on the retail side as it is limited to 10 per cent," said Tariq Qaqish, the managing director of asset management at Menacorp . "From the shallow liquidity in the market it seems some of the retail investors have already pulled investments from elsewhere to subscribe to the IPO." For the larger institutional tranche, however, it is "too early to say what the demand will be like, but we expect it to be fully subscribed or oversubscribed eventually", he said adding that the company has a clear dividend policy which makes it interesting for the institutions.
The company said it expects to announce the final pricing for the offering November 16 and the shares to commence trading on the DFM on November 22. The final sale price will be determined in accordance with a book-building process and investors in the retail offering will be allocated shares at the same price as investors in the qualified investor tranche of the IPO.
Bank of America Merrill Lynch, EFG Hermes, Emirates NBD Capital, First Abu Dhabi Bank and Goldman Sachs are acting as the joint global coordinators on the deal, while Emirates NBD and FAB are the lead receiving banks. Rothschild is the financial adviser on the transaction.
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Equity capital market deals have been few and far between in the Arabian Gulf region, especially in the UAE. The Emaar Development share offering will be the largest since Emaar's Malls unit IPO in 2014 which raised $1.6bn. Emaar Development is the first addition to the DFM trading platform since that of DXB Entertainments, about three years ago.
"This is an exciting time for the business and for the UAE capital markets," said Mohamed Alabbar, chairman of Emaar Properties. "Emaar Development's strategic decision to IPO provides both individual and institutional investors with the opportunity to invest in the future of Dubai as we continue to build iconic freehold master-planned communities."
Emaar Development has a clear strategy for growth, a proven business model, projects in premium locations, a strong management team and an attractive financial profile underpinned by Dubai’s transformation from regional to global destination, Mr Alabbar added.
The firm appointed on Wednesday former Nakheel top boss Chris O'Donnell as its chief executive and Sunil Grover, formerly of Emaar Properties, as the chief financial officer. John Carfi, formerly the chief executive of residential development at Australian developer Mirvac, is joining the company as chief executive of development and projects.
