- A trading screen on the floor of Dubai Financial Market shows the bid and offer levels for Emaar Malls Group shares.
- Asa Fitch for The Wall Street Journal
Shares of Emaar Malls Group started trading on the Dubai Financial Market on Thursday, marking the first significant new share sale in Dubai since the global financial crisis.
Emaar Malls isn’t a big deal globally. But traders here say the IPO means a lot for a small Middle Eastern exchange that’s trying to leverage Dubai’s economic and market rebound to gain visibility and credibility. Dubai’s companies and markets have always wanted to be taken more seriously, and the Emaar Malls listing fits that purpose.
“It will change the dynamics of Dubai to a vast extent,” said Sham Sajnani, a trader from India who has lived in Dubai since the founding of the United Arab Emirates in 1971. “Dubai is a new market, so it takes time for any new market to develop, and they are improving it.”
Emaar Malls is known mainly as the owner and operator of the Dubai Mall, a shopping megaplex near the Burj Khalifa that was the most-visited mall in the world last year, according to Emaar figures. Its portfolio includes a number of other large malls and smaller shopping centers, 34 of them in total.
While Emaar Malls is largely a local phenomenon – it doesn’t have any substantial assets or operations overseas – its listing did generate significant interest from international investors. Among institutional subscribers to the IPO, about a third were from the U.A.E., a third were from the wider Middle East, and a third from elsewhere.
Exchange executives and traders hope the Emaar Malls listing ushers in even more international investment. Their argument is that companies like Emaar Malls are managed to global standards with strong corporate governance in a market on the rise.
The DFM index, one of the hardest-hit measures in the world during the financial crisis, more than doubled in value last year and has risen a further 50% this year. Dubai-listed stocks were upgraded to emerging-market status from frontier-market by index provider MSCI Inc. earlier this year, giving the market another lift.
“We’re in the business of enhancing shareholder value,” Mohamed Alabbar, the chairman of Emaar Malls and its parent, Emaar Properties, said Thursday, describing the logic behind IPOs. “If we are able to do that, that’s why we’re hired, that’s why we are sitting on the boards of these companies. If there’s value to be created for shareholders, that’s the business we’re in.”
Already there are signs that more are on the way. Emaar is planning to list part of its hospitality division, which holds numerous large luxury hotels in Dubai, pending board approval. Other local companies are also plotting IPOs, including Gulf Capital, an Abu Dhabi-based buyout firm, and the Al Habtoor Group, a Dubai-based family-owned conglomerate.
But despite the gravitas that listings like Emaar’s bring to the Dubai market, there’s still more than a whiff of the small-time speculator culture that has dominated the investing scene here well before aspirations to global recognition jelled.
In perhaps one illustration of its persistence, Marka, a retail and hospitality start-up that hasn’t yet sold products or opened a single store, listed shares a week ago amid strong local investor interest. The enthusiasm was based largely on trust in the new company’s list of well-heeled angel investors. Following that IPO, another such start-up is planned later this month called Amanat. It will focus on the health care and education sectors, according to its backers.
Emaar Malls started trading Thursday at 3.4 U.A.E. dirhams ($0.93), about 17% above its issue price. It closed its first day of trading at AED3.25 a share.
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(via WSJ Blogs)
