Dubai’s biggest listed developer Emaar said it would sign a $335.2 million deal to sell its online fashion retailer Namshi to e-commerce firm Noon on Wednesday, with the transaction expected to close within six months.
Emaar will invest proceeds from the sale into its core property development business, it said in a statement to the Dubai Financial Market on Tuesday.
The company expects to generate a net profit of about Dh628.6m ($171m) from the deal, it said. However, the amount will be recorded after final regulatory approval in the next six months, so the actual profit ratio will vary between 5 per cent and 7 per cent based on the net asset value of Namshi on the deal's closing date.
"The transaction is in line with Emaar's strategy to divest assets that are not core to its primary business, so as to create and sustain value for its shareholders," it said. "The transaction is also in line with Emaar's strategy to redeploy capital across the group with a focus on investing in businesses that are of core strategic value.
Namshi will be sold at $335.2m and Emaar’s capital is Dh8.17 billion, so the ratio of the transaction value to Emaar’s capital is about 15 per cent.
Since this is more than 5 per cent of Emaar's capital, shareholder approval must be obtained at the next annual general meeting, the company said. Deloitte, an SCA-approved independent valuer, has conducted a valuation of the deal.
Emaar first announced its plan to sell Namshi to Noon on Saturday.
The UAE has witnessed a significant surge in online shopping, accelerated further by the Covid-19 pandemic.
The country’s e-commerce retail market hit a record $3.9bn in 2020, growing 53 per cent annually, with the sector accounting for 8 per cent of the overall retail market, the Dubai Chamber of Commerce and Industry said.
E-commerce licences issued by the emirate jumped 63 per cent in the first half of 2021, the Department of Economic Development said.
Consultancy AT Kearney estimated that GCC e-commerce revenue surged almost five-fold to $24bn last year from $5bn in 2015, predicting that this would thrive further thanks to a permanent change in consumer behaviour.
Amazon is the largest e-commerce player in the UAE, with net sales of about $500m in 2021, data from ecommerceDB indicates.
Namshi was second with $249m, while Noon, the portal backed by Emaar founder Mohamed Alabbar and Saudi Arabia’s Public Investment Fund, was next with $169m.
Emaar first bought a 51 per cent stake in Namshi for $151m in 2017 from Rocket Internet’s Global Fashion Group. It later acquired the remaining stake in the online fashion retailer for $129.5m.
Emaar Malls’ full acquisition of Namshi came two years after it made an 11th-hour bid to acquire rival platform Souq.com, which was eventually sold to Amazon for $580m in 2017.
Mr Alabbar launched the $1bn e-commerce platform Noon with the help of Saudi Arabia’s sovereign wealth fund in 2017.