Jewel in Dubai's property crown set to end UAE's IPO drought

[DUBAI] The company that helped build entire neighborhoods in Dubai plans to sell part of its business in the United Arab Emirates in an initial public offering.

Emaar Properties PJSC, which spearheaded a building boom in the emirate over the past 15 years and built the world's tallest skyscraper in Dubai, will sell 20 per cent of its real-estate development business, according to emailed statement on Sunday. Emaar Development is targeting the distribution of aggregate dividends of no less than US$1.7 billion, to be paid over the next three financial years ending Dec 2020.

The retail offering subscription period will be open for 11 days starting Nov 2. Emaar Properties's shares advanced more than 25 per cent since the plan was first announced in June.

Emaar's development business "has continued to do well despite an economic slowdown with offplan sales growing at double-digit rates, which shows what a strong brand it is," said Ayub Ansari, an analyst at Securities & Investment Co in Bahrain. "There is a delivery backlog of US$11 billion that's going to be recognized over the next four years, so clearly there's earning" potential, he said.

Excluding Orient UNB Takaful PJSC, which hasn't traded since it was listed in June, there have been no IPOs in the UAE since 2014.

The real estate business's share sale will be the fourth of Emaar's units to break away from the mother company - including one in Egypt and another in Saudi Arabia- but the second in the UAE. The first, Emaar Malls PJSC, is one of eight companies to have sold shares in an IPO since the start of 2010, almost all of which are trading below their offer price.

The UAE real-estate arm contributed 40 per cent of Emaar's revenue and 31 per cent of its gross profit in the first half, while the malls business provided 20 per cent of income and 34 per cent of profit, according to its results presentation. The hotels business contributed 10 per cent of revenue.

BLOOMBERG