Emaar Properties PJSC, the Dubai-based developer of the world’s tallest tower, hired Morgan Stanley to advise on the listing of its shopping malls and retail business, the largest share sale in the Middle East and Africa since 2008.
The company is also considering appointing a local bank as additional adviser on the offering of a 25 percent stake in the unit, Chairman Mohamed Alabbar said today in an interview in Dubai. Emaar is seeking to complete the deal by mid-June and plans to sell the shares on Nasdaq Dubai and in London, Alabbar said in a separate interview earlier with Bloomberg Television.
Middle Eastern companies are taking advantage of rebounding stock markets and asset prices to raise funds through IPOs and secondary offerings. U.A.E.-based real estate investment trust Emirates Reit said on March 11 that it would be the first company to stage an IPO on the Nasdaq Dubai in at least five years, while Emaar’s offer would be the largest in the region since a $2.47 billion sale by Saudi Arabian Mining Co. in 2008.
“I hope we can do it quickly because once you announce it, shareholders and the market are excited,” Alabbar said. “We need to be out in the international markets -- that’s part of the long-term strategy for the company that we build a relationship with international investors.”
Emaar plans to raise 8 billion dirhams ($2.2 billion) to 9 billion dirhams from the sale as a tourism boom increases mall revenue, the company said on March 15.
Proceeds from the secondary public offering will mainly be used pay a dividend to shareholders. Dubai’s government is Emaar’s largest shareholder with almost 30 percent of the stock, according to data compiled by Bloomberg.
Alabbar said the company is also considering share sales for its Egyptian operations as well as the hospitality unit.
“Believe it or not, the market in Egypt has been quite good for us,” he said. “We started some work on our hospitality division and we believe it’s also looking good, but we think we should delay for a year or more before we decide on listing.”
Emaar’s malls and retail business had a 20 percent increase in revenue to 2.84 billion dirhams in 2013, while the Dubai Mall attracted 75 million visitors last year.
The shares rose 5.4 percent, the most since Jan. 28, to 9.75 dirhams at the close in Dubai. The surge in Emaar, which has the highest weighting on Dubai’s index, helped push the benchmark measure 2.7 percent higher, making it the second-best performer among more than 90 gauges tracked by Bloomberg.
“Looking at the coming four years, the numbers will be good,” Alabbar said in the TV interview. “Cash flow is looking strong, performance is looking strong. The city of Dubai and the U.A.E. are really moving forward after the tough time that the world has gone through.”
Damac Real Estate Development Ltd., another Dubai-based property company, made its London debut in December. Damac listed global depositary receipts in an offering that valued the company at about $2.65 billion. The GDRs have since risen 35 percent.
Morgan Stanley expects to see two to three IPOs valued at more than $1 billion from the Gulf region this year, former Middle East and North Africa investment bank head Klaus Froehlich said in a Feb. 10 interview. A spokesman for the bank declined to comment today on its role in the Emaar offering.
Morgan Stanley was the sole adviser in the $15 billion state-backed merger of two aluminum producers in the United Arab Emirates last year. The bank also had an advisory role on merger between Abu Dhabi’s Aldar Properties PJSC and Sorouh Real Estate early in January 2013.