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Emaar mall unit IPO this month

Ememaar misraar Properties will launch its highly anticipated initial public offer of at least 15 percent of its shopping malls and retailing unit on Dubai’s main stock market in September, and plans to list the shares in October.

The offer would be one of the largest equity sales in the Middle East since 2008, underlining Dubai’s recovery from a credit crisis that forced many state-linked developers to stall projects, and some – though not Emaar – to restructure debt.

The announcement of the IPO on Sunday sent the share price of the parent firm up 6.3 percent to a 15-week high in early trading. Emaar Properties had initially revealed in March its intention to sell up to 25 percent of the unit in an offer likely to raise 8 to 9 billion dirhams ($2.18-$2.45 billion).

Emaar Properties, the emirate’s biggest real estate developer, will earmark 30 percent of the offer of shares in Emaar Malls Group (EMG) for individual investors, and 70 percent for institutional investors, it said in a statement to Dubai’s bourse on Sunday.

Ten percent of the offer would be reserved for Emaar Properties shareholders as of Sept. 10, while 5 percent would be reserved for state fund Emirates Investment Authority.

A spokesman for the company told Reuters that subscriptions would open next month and the shares would be listed in October.

“The IPO of EMG is a milestone for the development of the UAE capital markets as, for the first time, it combines institutional and individual shareholders in the same offering on the DFM,” said Mohamed Alabbar, chairman of Emaar Properties.

The marketing process has begun and a price for the IPO will be determined via a book-building process. While no formal pre-marketing took place, the spokesman said some conversations had been held with key Emaar Properties investors about the offer.

The developer, in which the Dubai government owns about 30 percent, will pay a dividend totalling around 9 billion dirhams to its shareholders; 5.3 billion dirhams of that amount will come from the IPO proceeds, and 3.7 billion dirhams from a dividend already paid by EMG to its parent.

Bank of America-Merrill Lynch, JP Morgan Chase and Morgan Stanley are joint global coordinators of the offer, with four other banks acting as joint bookrunners.

EMG posted revenues of 1.25 billion dirhams during the first six months of 2014, up 13 percent from a year earlier.-Reuters