Dubai’s largest listed developer Emaar Properties and e-commerce company Noon entered into a definitive agreement to sell Emaar Malls’ entire share capital in online fashion retailer Namshi to Emirati businessman Mohamed Alabbar's Noon for a total cash consideration of Dh1.23 billion ($335.2 million).
The sale represents an excess of Dh127m on Emaar Malls’ total investment in Namshi, including purchase consideration and subsequent investment, the companies said on Thursday.
“The capital generated through the divestment of Namshi, a non-core asset for Emaar, would be deployed in core focus areas to generate shareholder value,” said a representative of Emaar, the parent company of Emaar Malls.
“Further, the sale of Namshi at a premium to its purchase price generates additional value for Emaar shareholders.”
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 the GCC region's 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.
Emaar first announced its plan to sell Namshi to Noon on Saturday.
The Namshi transaction is in line with Emaar’s strategy to divest assets that are not core to its primary business and to create and sustain value for its shareholders, the company said.
Emaar will invest proceeds from the sale into its core property development business.
The transaction is expected to close in the next six months, subject to meeting various conditions, including inter alia, final regulatory approvals and approval from Emaar’s shareholders, the statement added.
“Namshi’s success and ambition are well-documented. The brand has evolved from a start-up to a beloved one, competing for local e-commerce with much larger international fashion and beauty players. And they've kept their lead,” a Noon representative said.
“Much of their story is similar to Noon’s. We’re thrilled to be able to assist them in taking their growth and success to the next level.”
Emirates NBD Capital and Linklaters advised Emaar Malls on the transaction as financial and legal advisers, respectively, according to the statement.
Credit Suisse and Clyde & Co were financial and legal advisers, respectively, for Noon on the transaction.
Namshi will be sold at $335.2m and Emaar’s capital is Dh8.17bn, 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 independent valuer approved by the Securities and Commodities Authority, conducted a valuation of the deal.
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.