Emaar to list up to 30% of UAE property business in Dubai
DUBAI: Emaar Properties PJSC, the Dubai-based developer of the world’s tallest skyscraper, plans to sell as much as 30% of its real estate development business in the United Arab Emirates (UAE) in an initial public offering.
The funds raised will primarily be distributed as dividend to Emaar’s shareholders, the company said in a statement yesterday. Emaar shares jumped as much as 8.4%, the most since January 2016, in Dubai.
“Selling down up to 30% of a key asset enables the company to reward shareholders now for cash flow that would be realised at the net level over years into the future,” said Sanyalak Manibhandu, head of research at NBAD Securities LLC. “Emaar spoke about paying some sort of a special dividend at the AGM. So this is a way for the management to realise the expectation the management raised at the AGM.”
The shares of the unit will also be listed on the Dubai Financial Market (DFM) and the sale is subject to market conditions. The IPO would be the largest in the UAE since Emaar Malls PJSC raised US$1.58bil in an offering in 2014.
Emaar, which itself is listed on the DFM, has spearheaded a build- ing boom in Dubai after the emirate allowed foreigners to own property in some parts of the city about 15 years ago as part of a plan to transform into the Middle East’s tourism and trading hub. Revenue from the company’s property development business in the UAE more than tripled to 14.4 billion dirhams (US$3.9bil) in 2016 from 4.2 billion dirhams in 2012, according to the statement.
The decision to IPO followed an internal review of the company’s asset values. “This indicated the importance of highlighting the value of this business as a major contributor to the overall profitability of Emaar through an independent listing,” according to the statement. “Investors who value the proven development track record of Emaar can invest directly in this business,” enhancing Emaar’s over- all valuation, it said.
Emaar also has development businesses in several other countries, including Saudi Arabia, Egypt, India and Pakistan. The Dubai government owns 29.2% of the company, according to data compiled by Bloomberg.
After developing the Burj Khalifa, the world’s tallest skyscraper, Emaar is now working on The Tower in Dubai Creek Harbour with Dubai Holding LLC that will feature a dedicated retail district for highend brands.
It is also developing the 11 million sq m Dubai Hills Estate in a joint venture with Meraas Holding, which will feature a retail hub and an 18-hole golf course.
Emaar has handed over around 34,000 units in Dubai since 2001 and currently has a land bank of 24 million sq m in the UAE. In the first five months of the year, its UAE development business had sales of 9.7 billion dirhams, a 24% increase from the same period in 2016. It had a total backlog of 40 billion dirhams.
The shares climbed 7.3% to 7.51 dirhams at 12:08 pm in Dubai, bringing the advance this year to 5.3%. That compares with a drop of 4.3% for Dubai’s benchmark index. – Bloomberg