Biggest Dubai Share Sale in Three Years Raises $1.3 Billion

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  • IPO of subsidiary is part of strategy to boost parent’s value
  • Initial public offering is the biggest in Dubai since 2014

Emaar Properties PJSC raised 4.82 billion dirhams ($1.31 billion) from the sale of a 20 percent stake in its United Arab Emirates development business, pricing the initial public offering at the bottom of a revised range.

The Dubai-based developer of the world’s tallest skyscraper sold 800 million shares of Emaar Development PJSC at 6.03 dirhams a share, it said in a statement. That compares with a revised price guidance of 6.03 dirhams to 6.9 dirhams and initial range of 5.7 dirhams to 6.9 dirhams. About 6.2 percent of the shares were sold to individual investors and 93.8 percent to qualified investors.

Emaar managed to complete the sale even after almost $19 billion was wiped out from exchanges across the six-member Gulf Cooperation Council countries last week. The market rout came after a Saudi crackdown against alleged corruption that led to the arrest of several princes and billionaires and as Tehran and Riyadh traded barbs on a missile attack on Saudi Arabia.

"Emaar Development has a clear strategy for growth, a strong sales backlog, high cash flows and targeted dividends of $1.7 billion to be paid over the next three years, indicating strong dividend yield," Emaar Properties Chairman Mohamed Alabbar said in the statement.

Dubai’s main stock benchmark lost 4.8 percent in the five days through Nov. 9. The subscription for the offering started only days before the geopolitical tensions escalated.

While Emaar Properties shares have declined about 5 percent in the past two weeks, they are still up 13 percent since it initially announced the intention to sell shares of Emaar Development in June. The company expects to pay at least $1.7 billion in dividend over the next three years. Emaar Development shares are expected to be listed on the Dubai Financial Market on Nov. 22.

The sale is the largest since Emaar Mall PJSC’s $1.6 billion offer in 2014, according to data compiled by Bloomberg. Emaar Properties, which has the government of Dubai as its main shareholder, spearheaded a building boom in the emirate after foreigners were allowed to own properties in parts of the emirate in 2002. Apart from Emaar Malls, some of its subsidiaries in Saudi Arabia and Egypt are already listed locally, as part of a strategy to bolster the value of the parent company.

Emaar Properties said third-quarter net income increased 32 percent to 1.51 billion dirhams. The company said it has more than 24,000 developments under construction, and that it’s in a position to create strong cash flows in coming years.

Emaar Development had sales of 1.3 billion dirhams between Oct. 1 to Nov. 13, according to the statement. The company drew down 4 billion dirhams of its 4.8 billion-dirham murabaha facility to pay a dividend of 3.9 billion dirhams to parent Emaar Properties. It had gross debt of 4 billion dirhams as of Nov. 13.

Parent Emaar’s shares rose as much as 1.5 percent in Dubai trading on Thursday.

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