Dubai tycoon makes US$599m offer to take Damac private

[DUBAI] Dubai-based billionaire Hussain Sajwani offered to take over the rest of Damac Properties at a discount of nearly 45 per cent to the developer's local listing in 2015, the latest bid to buy out minority shareholders in the United Arab Emirates over the past year.

Maple Invest, an investment vehicle owned by Mr Sajwani, offered US$599 million, making what it called "a voluntary conditional offer for the issued share capital of Damac not already owned by Maple and its affiliates," according to separate statements on Wednesday. Mr Sajwani, who owns a 72 per cent stake in the developer, resigned as Damac's chairman to avoid conflict of interest.

Sluggish trading, a slump in prices and liquidity, and a desire to escape investor scrutiny have been driving efforts to take public companies private in Dubai. Emaar Properties said in March it will effectively delist one of its units for about two-thirds of its original public-offering price. Late last year, government-controlled Meraas Holding proposed taking DXB Entertainments private at a 33 per cent discount.

"The suggested premium appears very low given recent developments in the Dubai real estate market and the improved outlook for both demand and prices," said Tarek Fadlallah, the Dubai-based chief executive officer of the Middle East unit of Nomura Asset Management.

Dubai's property market has been improving and the pace of residential property price declines has been slowing this year. Dubai's largest developer Emaar Properties said sales in the first five months of this year more than tripled from 2020 to 10.5 billion dirhams (S$3.78 billion).

Damac listed in Dubai's main bourse in 2015 in an exchange for shares that were traded in London since 2013. The company raised about US$379 million with its UK IPO.

Its stock is down about 1.5 per cent for the year, lagging a 14 per cent increase for the DFM General Index and a 13 per cent increase for a gauge tracking listed real estate companies.

Emaar Malls's de-listing plans paved the way for Damac and the stock market will be left with less depth as a result, according to Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital.

The trend may have repercussions for a market that's struggling to sustain interest and risks depriving investors of exposure to one of the emirate's crucial sectors.

Damac has reported losses in 2020 and 2019 as the property market struggled with an oversupply that hammered prices for the past seven years. The construction industry will deliver an estimated 62,000 homes in Dubai this year and nearly 63,500 in 2022, which would be the most since 2009, according to consultancy firm Knight Frank.

"The premium that used to be there for public companies in the real estate industry is no longer there," he said. "Real estate firms are lagging and managements are under pressure at a time recovery has some time to go." BLOOMBERG