DUBAI: Dubai’s Emaar Properties has priced the initial share sale of its malls business at the top end of the proposed range, marking another milestone in the return of investor confidence in the Gulf Arab state after the financial crisis.
Shares in Emaar Malls Group (EMG) were allocated at Dh2.90 apiece following huge demand, giving an overall sale value of Dh5.8bn ($1.6bn) and making it the largest stock sale in the Gulf region since 2008.
After years of debt-fuelled expansion, Dubai was hit hard by the global financial crisis and needed a multi-billion dollar cash injection by neighbouring emirate Abu Dhabi. Several of its largest companies have since undergone painful restructurings, while a pick up in revenue from the core industries of travel and tourism — of which EMG’s Dubai Mall is among the biggest draws — has helped to lure investors back.
With a market value of Dh37.7bn upon listing, EMG will become the third-largest stock on the Dubai Financial Market when it begins trading on October 2.
It is the biggest initial public offering (IPO) in the Gulf since Saudi Arabian Mining Co (Ma’aden) raised $2.47bn from its debut on the Saudi stock exchange in July 2008.
It will also be the second stock listing on the Dubai bourse in just over a week, following a five-year hiatus, after Marka debuted on September 25. That IPO — albeit only worth Dh275m — was hugely oversubscribed by investors as well, and the shares jumped 59 percent on its first trading day as pent-up demand pushed the price higher.
Analysts are expecting a positive reception for EMG too.
“Although the valuation looks a bit stretched, with strong demand from both retail and institutional investors I think the stock might get a good reaction,” said Harshjit Oza, banking and property analyst at Naeem Brokerage in Cairo.
Naeem had estimated at the mid-point of the proposed price range that EMG would be valued at 28.5 times this year’s forecast earnings. That would be above the parent company’s multiple of about 25 times earnings and the wider stock market’s 16, according to a data.
Mohamed Alabbar, chairman of Emaar Properties, said the firm was delighted with the response from both professional and retail investors for EMG’s IPO. Reuters
