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Optimism reigns ahead of Emaar Development IPO launch

Optimism reigns ahead of Emaar Development IPO launch
Emaar Development IPO will add to the market and boost liquidity
Emaar
EMAAR
-0.49% 8.15 -0.04

By: Mahmoud Gamal

Dubai – Mubasher: The initial public offering (IPO) of Emaar Development is expected to lure numerous retail and institutional investors to the Dubai FInancial Market (DFM), analysts told Mubasher.

The IPO of Emaar Properties’ unit is set to launch on Thursday, 2 November, where Emaar Properties will sell 20% or 800 million shares of its real estate development firm.

The sale will close on 13 November for individual investors and on 15 November for institutions.

 

IPO details

This IPO will be the largest in the field and will be oversubscribed more than once, analysts told Mubasher.

The new offering is forecasted to be the same as in the first major listing of Emaar Malls on the DFM in 2014, Emaar said in an official statement.

Emaar Malls had raised about AED 5.8 billion ($1.6 billion).

 

Anticipated success

Wadah Al Taha, UAE advisory board member at the Chartered Institute for Securities and Investments (CISI), told Mubasher that he sees the IPO's success as guaranteed.

Earnings per share (EPS) amount to 0.52 fils, Al Taha highlighted, adding that the return will be above the market's average cash distributions.

The IPO's proceeds are likely to be distributed in January 2018, the company said in a statement to the DFM.

 

High demand

The new IPO will be oversubscribed more than once due to the high demand for Emaar Development's shares, general manager at Al Ansari Financial Services Eyad Al-Bareeqy told Mubasher.

He added that Emaar’s recent board meeting will ensure the IPO's success.  

 

Huge support

Al-Sharhan Centre general manager Gamal Ajaj said that Emaar Properties’ unit will offer 80 million shares for individuals, which is not a major offering, concurring with other analysts that the IPO will be easily oversubscribed.

This IPO will not affect the market as the company has not previously set price ranges, he added, noting that the IPO may not be attractive to younger investors as the company has not set a fixed price for its shares.

This offering will add to the market and boost liquidity, Ajaj said, pointing out that the IPO’s proceeds are expected to be distributed over Emaar Properties’ shareholders, which will bolster Emaar Properties’ stock as well as other stocks.

 

Solvency

Emaar Development’s IPO will attract individuals and local, regional, and global institutions, CEO of MindCraft Consultants Fadi El-Ghattis said.

Emaar is a major company, which is distinguished by its good solvency and profit growth, El-Ghattis added, noting that Emaar Development represents more than 70% of Emaar Properties’ operating income.

El-Ghattis explained that the way of offering Emaar’s unit and not setting a price are good mechanisms in the market.

 

All segments

The IPO will target all segments and domestic and global institutions, said Tarek Qaqish, head of asset management at MENA Corp.

This will reinforce foreign investment in the market, Kakish added, forecasting that individual investors will cover the IPO by 5%.

 

Emaar Development

Emaar Development, a unit of Dubai-based Emaar Properties, manages the development of most of the UAE’s residential and commercial assets.  

The real estate development unit is behind some of the UAE’s remarkable projects, including Emirates Living, Downtown Dubai, Marsa Dubai, and Arabian Ranches.

Emaar Development posted profits of AED 2.1 billion in the first nine months of 2017, according to data released.

The Dubai-based real estate company is expected to achieve cash flows of AED 18 billion from its accumulated sales over the coming four years.

 

Translated by: Mai Ezz El-Din