Dubai luxury property developer DAMAC is offering investors the option of converting its Global Depositary Receipts (GDRs), listed on the London bourse, into ordinary shares that would be listed on Dubai’s main stock market.
Investors would get around 23.08 shares per GDR. They have until Sept. 2 to decide on the offer, the developer said in a statement to the London bourse on Wednesday.
No new shares would be listed and executive chairman Hussain Sajwani would continue to hold 85 percent of the company.
“Those investors who choose not to participate in the offer will continue to hold their GDRs, which will remain traded on the London Stock Exchange,” Sajwani said in the statement. The offer is conditional on the Dubai bourse approving the conversion.
The listing would be a boost for the Dubai Financial Market ; new listings dried up after the emirate’s financial crisis erupted in 2009, but are now showing signs of a revival. Retailing and restaurants group Marka IPO-MARK.DU plans to list on the DFM in the second week of September, while Emaar Properties aims to list its malls unit this year.
DAMAC listed in London last December at $12.25 per GDR. The GDRs closed at $16.09 there on Wednesday. In May, the company said its net profit for the first quarter rose 79 percent as it benefited from buoyant conditions in its Dubai home market.
The reasons for this about turn in some eight months seem pretty obvious given the Dubai story remains a positive one with both its property and stock markets continuing to do well amid an economic rebound.
For one, as Damac itself said, the Dubai listing should help boost liquidity in its shares. Trading of its London GDRs has been relatively light, though one of its senior executivesin May tried explaining that by saying there weren’t many willing sellers. And by listing first in London, its listing in Dubai has become easier – helping it to bypass the more stringent U.A.E. IPO requirements.
A Damac spokesperson declined to comment on its Dubai listing plans, but most analysts and fund managers welcomed the move.
“For Damac, firstly it makes sense to get listed in a market where it operates, and secondly the move should help improve the stock’s liquidity and attract more retail investors which account for almost 80% of the U.A.E. market turnover – on an average,” said Harshjit Oza, the assistant director of research at Cairo-based Naeem Holding.
“Around 87% of Damac’s proposed handover will be in Dubai and with such high exposure to Dubai, the management cannot afford to ignore a local listing, especially when the participation from local/retail investors is huge,” Mr. Oza noted.-Reuters
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