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Abu Dhabi, UAEMonday 10 December 2018

Emaar Development IPO said to offer shares at up to 20 per cent premium

Lead managers forecast fair value for Emaar Properties unit at up to Dh33bn, sources say

A view from the Emaar-built Burj Khalifa. The firm will offer up to 20 per cent premium in its IPO, sources say. Satish Kumar / The National
A view from the Emaar-built Burj Khalifa. The firm will offer up to 20 per cent premium in its IPO, sources say. Satish Kumar / The National

Emaar Properties is expected to offer shares in its UAE development business at a 10 to 20 per cent premium to the unit’s net asset value, according to three people familiar with the plans.

The lead managers on the initial public offering are estimating Emaar Development's fair value at between Dh26 billion and Dh33, two of the people said, asking not to be identified. A 10 to 20 per cent premium would imply an offer price of Dh6.63 to Dh7.23 a share, according to Bloomberg calculations.

A spokesman for Emaar said the company would not comment on rumours or speculation.

Emaar Properties, which spearheaded a building boom in the emirate over the past 15 years and built Burj Khalifa the world’s tallest tower in Dubai, will sell 800 million shares, or 20 per cent of its real-estate development business, starting on November 2. The sale will close on November 15 and the company expects to announce final pricing a day later. Shares will be listed on the Dubai Financial Market on November 22.

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Emaar said on October 22 the unit had a net asset value at Dh24.1bn at the end of September, or Dh6.025 a share. Damac Properties trades at a 16 per cent premium to net asset value, according to Bloomberg calculations.

Emaar Development is targeting the distribution of aggregate dividends of no less than US$1.7bn, to be paid over the next three financial years ending December 2020. Annual dividend payments after that are expected to increase further due to lower leverage and higher expected cash flow from operations, it said.

Given its dividend plans, Emaar Development may price at the top end of the range, although the overall price range could move depending on demand, one of the people said.