Emaar hires Goldman for property unit’s IPO
dubai — Emaar Properties hired Goldman Sachs Group to manage the sale of shares in its UAE real estate development business in Dubai, chairman Mohamed Alabbar said.
The developer of the world’s tallest tower expects to complete the initial public offering by November with a size similar to its Emaar Malls offering, Alabbar said in an interview with Bloomberg Television. The malls unit IPO raised about $1.58 billion in 2014 and is the largest share sale in the UAE in the past nine years, according to data compiled by Bloomberg.
Emaar, listed on the Dubai Financial Market, announced plans to spin-off its real estate unit on Wednesday and use the proceeds to pay a special dividend. The move sent shares in the company up 8.6 per cent on Wednesday. Revenue from the company’s property development business in the UAE more than tripled to Dh14.4 billion ($3.9 billion) in 2016 from Dh4.2 billion in 2012, according to Wednesday’s announcement.
Dubai’s biggest publicly-traded company is listing its UAE real estate arm to help achieve a better valuation from investors, Alabbar said. The shares have rebounded 9 per cent since dropping to a six month low on June 6.
“If you look at our Dh53 billion valuation and cut it to pieces you realise there is zero value for our development business, which is massive,” Alabbar said.
“We just want to bring in value as soon as possible for our customers and to reflect the correct value of our shares.”
More spin-offs
Emaar has transformed itself into a conglomerate with mall, hospitality and entertainment divisions after starting as a property developer in 1997. After developing the Burj Khalifa, the world’s tallest skyscraper, the company is now working on The Tower in Dubai Creek Harbour with Dubai Holding.
It’s also developing the 11 million square-metre Dubai Hills
We just want to bring in value as soon as possible for our customers and to reflect the correct value of our shares Mohamed Alabbar, chairman of Emaar Properties
Estate with Meraas Holding, which will feature an 18-hole golf course.
Emaar may consider spinning off its entertainment and hospitality units as it seeks to maximise its equity valuation, Alabbar said.
“For us to drive the best value for our shareholders I think we probably have to spin these organisations out, let them all focus on their businesses and let shareholders decide which shares they want to own,” he said. “Then we become a holding company with a focus on driving these entities and creating value.”
Blackstone Group and CVC Capital Partners are among buyout firms weighing a bid for as much as a 40 per cent stake in some of the assets in Emaar’s entertainment division, people familiar with the matter told Bloomberg in May. The entertainment unit includes Dubai Aquarium & Underwater Zoo, Dubai Ice Rink and movie-theater chain Reel Cinemas.
Emaar Hospitality Group “will be listed at an appropriate time depending on the business requirements and market conditions,” the company said in a statement in April.