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Emaar planning to sell 15% of malls unit in IPO

August 31, 2014

Property giant to launch IPO on Sept 10, list shares in October

Developer Emaar is to sell at least 15 per cent of its retail subsidiary, Emaar Malls Group, or EMG, in an initial public offering on the Dubai Financial Market in a move that would result in its shareholders getting Dh9 billion in dividend, the company confirmed on Sunday.

Emaar the developer of Burj Khalifa, the world's tallest building, and The Dubai Mall, one of the world's largest shopping malls said 30 per cent of the IPO would be made available to individual investors while 70 per cent would be set aside for qualified institutional investors with 10 per cent being targeted for preferential allocation to existing Emaar Properties shareholders.

Emaar will launch the IPO on September 10 and plans to list the shares in October.

The company said in a statement that it would earmark around Dh5.3 billion from the proceeds of the offering to be paid as dividends. Added to the Dh3 billion received from EMG before the IPO, this will result in a total dividend close to Dh9 billion to shareholders, as previously stated.

The announcement of the IPO sent the share price of the parent firm up 8.78 per cent to a 15-week high in early trading on Sunday. Emaar Properties, in which the Dubai government owns about 30 per cent, is the largest listed stock on the DFM with a market value of around $22 billion. The DFM's total value is close to $94 billion, according to data from

The valuation offering will be dependent upon the book-building process, the company said. But in March, Emaar Properties first disclosed its intention to sell up to 25 per cent of the unit in an offer likely to raise Dh8 billion to Dh9 billion.

Mohamed Alabbar, chairman of Emaar Properties, said the proposed IPO of EMG is a significant strategic step for Emaar Properties, allowing its shareholders to realise value from the Malls business, while continuing to allow EMG to benefit from the development expertise and significant land bank of one of the largest developers globally.

"The intention to generate proceeds for Emaar Properties by listing EMG shares on the DFM will continue the established trend of returning funds from the group to shareholders. This underlines Emaar Properties' commitment and gratitude to our shareholders for their dedication and loyalty since 1997," said Alabbar. He said the IPO of EMG is a milestone for the development of the UAE capital markets as "for the first time, it combines institutional and retail shareholders in the same offering on the DFM. This further demonstrates Emaar Properties' pioneering role in the UAE capital markets, having been the first company to list on the DFM in the year 2000".

Alabbar pointed out that EMG had delivered strong growth and profitability in the last six years that has enabled it to make substantial investments which are expected to increase its gross leasable area, or GLA, by around one million sqft by 2016 and enhance the group's revenue and margins.

"As the owner of EMG, Emaar Properties is excited about the future growth of the group and will do its upmost to ensure that the business continues to flourish in this new stage of its development," he said.

The Dubai Mall, the flagship asset of EMG, last year drew around 75 million visitors. The mall accounted for 50 per cent of all luxury goods sold in Dubai by value in 2013. The Dubai Mall is the largest source of income for EMG, which recorded revenues of Dh1.250 billion during the first six months of 2014. This is 13 per cent higher than the 2013 first half revenue of Dh1.106 billion. In the second quarter of 2014, malls' revenue was Dh650 million, 11 per cent higher than the Dh584 million in the second quarter of 2013.

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 book-runners.

Nasser Rafi, chief executive officer of EMG, said the mall group has delivered strong growth and cash flow generation.

"Following the successful placement of our Dh2.8 billion sukuk earlier this year, we view the IPO as a key milestone in establishing EMG as an independent company," he said.

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Source: Khaleej Times (United Arab Emirates)

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