Emaar plans $2.45 billion mega listing for mall

DUBAI: Dubai’s Emaar Properties has announced that it will sell up to 25% of its shopping center and retail unit in a public offering expected to raise Dh8 billion to Dh9 billion ( $2.18 billion to $2.45 billion), making it one of the largest stock offerings in the region since 2008.
The proceeds “will primarily be distributed as a dividend” to Emaar shareholders, Dubai’s largest listed property developer said in a statement yesterday, without giving a timetable for the offering. The shares for sale will come from the unit’s current equity.
Dubai-listed Emaar’s flagship mall is the Dubai Mall, one of the largest in the world, which attracted more than 75 million visitors in 2013. The company also built the Burj Khalifa in Dubai, the tallest building in the world.
The listing plan underscores Dubai’s recovery from its financial crisis, which erupted in 2009. Prior to the crisis, Emaar had talked about listing its mall business but was forced to put the plan on hold due of the collapse of the real estate and stock markets of the emirate. Both markets are now rebounding strongly on the back of foreign capital inflows, with residential property prices up more than 20% last year and Dubai’s main stock index up around 140% since the end of 2012.
Emaar is 31% owned by the government of Dubai, which is expected to earn a dividend of around $750 million from the listing – a significant windfall as Dubai and its government-linked businesses face tens of billions of dollars in debt maturities in the next few years, legacy of the crisis.
The shopping and retail centers unit recorded revenue of 2.8 billion dirhams last year, up more than 20% from 2012, while its gross operating profit rose 20% to 2.2 billion dirhams, Emaar said. The company’s total revenue last year was 10.3 billion dirhams.
More than 55% of the company’s revenue currently comes from its shopping centers and retail, hospitality and leisure, and international businesses, Emaar said, indicating that more subsidiaries would eventually be listed.
“The Board of Directors decided that the listing of various Emaar subsidiaries, with a view to creating independent companies with their own growth strategies and management structures, was imperative to achieve the long-term growth strategies of Emaar. Emaar…
The listing plan could give a boost to the Dubai Stock Exchange, which has not fully recovered from the crisis. There have been no initial public offerings of shares in Dubai since 2009, although a real estate investment trust is eyeing an IPO in the coming months.
When Dubai luxury property developer DAMAC went public last December, it did not do so at home but in London, where companies can attract wider investor bases and face challenges. less strict ownership rules.
Emaar did not say in his statement where his unit would be listed, and he said no decision has yet been made. However, one of the biggest companies in the emirate might find it controversial to list a unit overseas instead of supporting local market development.
The company’s intention to sell no more than 25% of its unit suggests that unless the rules are changed, the listing will not happen on the Dubai Financial Market, the larger of the two stock exchanges in the world. emirate, requiring more companies to go public. Instead, listing can take place on Nasdaq Dubai, which has a 25% minimum.
Reuters


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Peggy P. Gilmore