Manazel lines up IPO after annual profit of Dh360m

Cityscape: The Abu Dhabi developer behind Al Reef is planning an IPO as early as this year after notching up Dh360 million in profits in 2011.

Manazel Real Estate is planning an initial public offering as early as this year. Ryan Carter / The National

The Abu Dhabi developer behind Al Reef is planning an initial public offering as early as this year after notching up a profit of Dh360 million (US$98m) last year.

Manazel Real Estate aims to sell shares to the public after the expected introduction of new listing rules that would no longer require an increase in capital for companies intending to go public.

"We have submitted our request to the ministry and they have told us to wait for the new regulations coming in this year that will not require an increase in capital," said Mohamed Mehanna Al Qubaisi, the chairman of Manazel.

There have been few new listings on Gulf stock markets as low valuations and thin trading volumes deter companies from going public.

The Gulf had nine public offerings last year that raised $789m. In 2010, there were 12 IPOs, which raised more than $2 billion, according to data from PricewaterhouseCoopers.

Investors have been wary of property stocks after a region-wide decline in property prices left many developers saddled with high levels of debt they were unable to service.

But Mr Al Qubaisi said annual recurring revenue of about Dh200m from Manazel's existing commercial, residential and retail portfolio might be attractive to investors.

The company says it generated sales of about Dh1.3bn last year and intends to pay existing investors a dividend of 5 per cent.

"With the current momentum in the stock markets and the bottoming of Abu Dhabi real estate prices, investors will have interest especially as rivals Aldar and Sorouh [Real Estate] make plans to merge into one company," said Tariq Qaqish, a fund manager at Al Mal Capital in Dubai.

The Abu Dhabi Securities Exchange General Index has risen 4 per cent this year, trading at about 2,500 points, while the Dubai Financial Market General Index has advanced 21 per cent in the same period, trading at about 1,353.

"The entrance of Manazel to the market will bring a new competitor on the stock exchange, but it will have to offer an attractive valuation to trigger significant interest," said Mr Qaqish.

Property valuations are currently trading at 9 to 12 times earnings.

"Manazel has catered to mid-class property, making it affordable for clients in Abu Dhabi, and they have survived during the credit squeeze, which really proves that they are well managed," Mr Qaqish said.

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