Dubai World has agreed to sell its retail unit to Marka for about Dh220 million as the conglomerate seeks to raise cash from asset disposals to repay lenders.
Marka, the recently listed retail and hospitality group, said it agreed to acquire Retailcorp UAE, a unit of Istithmar World, which is a part of Dubai World.
Marka expects the acquisition to pave the way for the group to become operationally profitable next year. It will be funded by a blend of the company’s own funds and bank facilities.
Marka's listing on the Dubai Financial Market in September – a greenfield IPO, meaning it had no trading track record or substantial assets – raised about Dh275m. It has a further Dh225m in start-up capital from founding shareholders.
Through the Retailcorp deal, Marka has cemented a solid foundation in the high-growth sports retail sector, the company said.
“This acquisition is in line with our strategy to establish a diverse portfolio of assets and successful businesses,” said Jamal Al Hai, chairman of Marka.
“This deal also bolsters and diversifies Marka’s revenue sources, our bottom line, and the value we bring to our shareholders.”
However, the company’s strategy is focused on the sports, hospitality and fashion segments of the retail business and high-quality casual dining outlets in retail centres.
The plan is to offer high-value products through top-end malls in Dubai and Abu Dhabi, then expand in Saudi Arabia, Kuwait and Qatar, aiming to become the “leading retail operator in the GCC”.
The purchase of Retailcorp will give Marka ownership of 15 sports shops in malls across the country, with rights to sell brands that include Nike, Reebok and Adidas.
Nick Peel, chief executive of Marka, said: “The growth of the sports retail segment in the UAE and the region is outpacing what we are seeing on the global level. This is a result of factors ranging from strong population growth, rising income levels, and the pursuit of a growing number of citizens and residents adopting a healthy lifestyle, in part because of the UAE government’s support of the sports sector.”
Marka aims to expand the network of the sporting goods stores, under the brand name of Modell’s Sporting Goods, in the UAE and across the region.
Marka has signed global superstars such as the footballer Cristiano Ronaldo to promote his own designer footwear, as well as leading fashion brands such as Sonia Rykiel and Laurel. It also plans to open high-quality casual dining outlets in retail centres.
Marka also plans to open the world’s first Harper’s Bazaar Cafe in Dubai before November next year, with a target to open nine other branches in the Middle East by 2020.
Dubai World, which restructured US$25 billion of debt in 2011, is seeking to sell assets as part of plans to pay about $4.4bn of debt due next year.
Dubai World is in talks with creditors to strike a deal over $15bn worth of debt that is being restructured in long-running talks with more than 100 banks and financial institutions.
Under the terms of the new proposed deal, Dubai World will repay early and in full the $4.4bn chunk of debt that matures next year, and in return will get a four-year extension on $10.5bn of debt due in 2018.
Dubai World has been selling a number of assets, including Economic Zones World, to the port operator DP World for $2.6bn this year.
Dubai World’s portfolio includes financial investments, industrial holdings and real estate. Istithmar World’s portfolio includes consumer, industrial and financial services, hotels and commercial property sectors such as the entertainment group Cirque du Soleil and the Mandarin Oriental hotel in New York.
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