Dubai government-owned property developer Meraas Holding is considering selling shares to the public as the regional real-estate market continues its rapid recovery from the financial crisis, according to three people familiar with the matter.
The real-estate company, which has close links to Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum, recently sent a request for proposals to banks who have until September to reply, said one of the three people who has seen the RFP. Meraas is asking banks to advise on improving the company’s general capital structure and equity financing options, including an initial public offering, said the people.
Dubai’s real-estate market has rebounded briskly in the past year in large part because of the strengthening local economy, which has been revitalized by a surge in tourism and trade activity. The emirate has also won the rights to host the World Expo in 2020, while index compiler MSCI Inc. MSCI upgraded the United Arab Emirates to emerging market status earlier this year, further boosting sentiment.
Alongside a renewed bout of optimism, Dubai has announced the construction of a raft of megaprojects, including an entire new city named after the city’s ruler, which is jointly developed by Meraas and local real estate giant Emaar Properties.
“Meraas has a phenomenal land bank and the future holds a lot of potential for them,” said one of the bankers. Meraas is overseeing a project on reclaimed land that involves the construction of the world’s tallest Ferris wheel. It is also developing a residential area on an artificial island called Pearl Jumeirah off the emirate’s coast and a nearby shopping district named Citywalk. In 2011, the developer said it would develop a movie-based theme park and a China-themed shopping mall.
Bankers say Meraas’ potential IPO plans are still at an embryonic stage and that no decision has been taken as the company first wants to explore all its options based on the advisers’ responses. One banker said the possible listing would be on Dubai’s main stock exchange. They say Meraas’ decision to list is likely to be influenced by the outcome of Emaar Properties’ planned flotation of its malls business, which is expected as early as next month.
“If it (Meraas IPO) happens, it will certainly be after the Emaar Malls IPO, which everybody will be looking at,” said one of the bankers. “Emaar is much more advanced in its corporate development—Meraas has just started.”
Soon after being established in 2007, when Dubai’s property market was nearing its peak, Meraas announced a $95 billion city project, but those plans were put on hold because of the global financial crisis and as funds dried up. The company since then underwent a financial and organizational turnaround.-WSJ