Emaar Properties PJSC plans to buy land in Egypt for the first time since the 2011 Arab Spring after the initial public offering of its local unit, Emaar Misr.
Dubai’s biggest publicly traded company will use the proceeds to invest in land that “matches the investment criteria of Emaar Misr,” it said in a statement to the Dubai bourse on Wednesday. Emaar will also use part of the funds to develop the commercial and business portions of its existing projects in Cairo and a resort on the nation’s Mediterranean coast.
Emaar, which developed the world’s tallest skyscraper in Dubai, is pushing ahead with a plan to raise as much as 2.82 billion Egyptian pounds ($370 million) in a share sale. The transaction could mark Egypt’s biggest IPO this year, data compiled by Bloomberg show. North Africa’s largest equities market is rebounding from a five-month low after the government this week suspended a capital gains tax.
“Emaar, like a lot of real estate developers in Egypt, is running out of land inventory,” Habiba Hegab, lead real-estate analyst at Cairo-based investment bank Beltone Financial, said by phone. “Acquiring new land is important to maintain cash flow once their current projects are sold. They want to have enough inventory to capitalize on high demand in the market.”
Emaar Misr is bidding for two plots of land west of Cairo with a combined size of about 600 acres, according to a report in Al Borsa newspaper on Wednesday.
In addition to population growth, demand for property in Egypt is being driven by investors seeking a safe haven from the country’s high inflation and currency depreciation, Hegab said. Annual price growth stood at 11 percent last month, compared with a four-year average of 9.2 percent. The pound has lost 24 percent of its value since the onset of political unrest in 2011.
Emaar Misr will sell stock to Egyptian retail investors and hold a private placement to institutions in “a number of countries,” it said. The IPO’s size is based on the maximum valuation determined by Emaar Misr’s financial adviser, reported by the company on May 5.
Emaar Properties plans to keep at least a 87 percent stake in Emaar Misr following the sale, it said.
Egypt’s benchmark EGX 30 Index retreated 0.6 percent on Wednesday after its biggest two-day gain in almost three years. Emaar stock fell 0.3 percent in Dubai, trimming its advance in 2015 to 12 percent.