Emaar unit IPO may be at 20% premium

10% to 20% premium would imply an offer price of Dh6.63 to Dh7.23 a share

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 LLC’s fair value at between Dh26 billion ($7.1 billion) and Dh33 billion, two of the people said, asking not to be identified because the information isn’t public. 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 wouldn’t comment on rumours, speculation.

Sale dates

Emaar Properties, which spearheaded a building boom in the emirate over the past 15 years and built the world’s tallest skyscraper in Dubai, will sell 800 million shares, or 20 per cent of its real-estate development business, starting tomorrow. 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.

Emaar said October 22 the unit had a net asset value at Dh24.1 billion at the end of September, or Dh6.025 a share. Damac Properties Dubai Co., a competitor to Emaar, trades at a 16 per cent premium to net asset value.

Emaar Development is targeting the distribution of aggregate dividends of no less than $1.7 billion, 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.

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