Dubai Parks IPO already oversubscribed by 60 times

The share sale – which was fully subscribed within hours of opening this month – could generate even more investor demand, with the retail offering open until Sunday.

A rendering of the Riverpark development. Courtesy Meraas
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Investing institutions have shown a big appetite for shares in the Dh2.5 billion initial public offering of Dubai Parks and Resorts, with bankers suggesting it was about 60 times oversubscribed at the close yesterday.

The share sale – which was fully subscribed within hours of opening this month – could generate even more investor demand, with the retail offering open until Sunday. One adviser, who did not want to be identified, said that the total final level of oversubscription could be more than 75 times.

That level of investor appetite would make Dubai Parks, being partially sold by the Dubai government-owned developer Meraas Holding, by far the most in-demand of the current batch of IPOs. Emaar Malls’ offering attracted 30 times oversubscription from institutions, and 20 times from retail.

“Investors have realised there is no other opportunity to get a slice of the action in Dubai’s leisure, travel and tourism markets, which the emirate does so well,” said the adviser.

Dubai Parks is building a triple-themed leisure resort, with Hollywood, Bollywood and Legoland attractions, to open late next year. It hopes to draw 6.7 million visitors in its first year of operation. The resort is a key part of Dubai’s ambition to build its position as the region’s leading tourism centre, pulling in 20 million visitors a year by 2020, double the current level.

“With Dubai’s status as a leading global tourist destination continuing to grow, there exists an exciting opportunity to enhance the emirate’s leisure, entertainment and retail offering,” said Raed Al Nuaimi, the chief executive of Dubai Parks.

The Dh10.4bn theme park is being financed by the proceeds of the IPO, a Dh4.2bn bank loan arranged by the US investment bank Goldman Sachs, and capital injections from Meraas.

Meraas is floating about 40 per cent of the resort business, giving a total market capitalisation of Dh6.3bn.

Of the 40 per cent on offer, 25 per cent is earmarked for institutions, and 10 per cent for UAE retail investors. The balance of 5 per cent has been offered to Emirates Investment Authority (EIA) as per federal regulations, but it is not known if EIA has taken up the allocation.

Once the final level of subscription is calculated and oversubscribed bids scaled back, the final allocation will be determined ahead of the first day of trading, set for December 10, on the Dubai Financial Market.

The IPO has been managed by Goldman Sachs, Emirates NBD and HSBC as global managers and book runners. EFG Hermes is also a joint book runner and Shuaa Capital a co-manager.

The Dubai Parks offering is the latest in a wave of IPOs that has hit local markets since the summer. Apart from Emaar Malls, two “greenfield” offerings – Marka and Amanat – have also been successfully floated on DFM. Shares in Amanat, the healthcare and education start-up backed by big regional investors, will begin trading on Sunday.

Karim Awad, co-chief executive of EFG Hermes, said the Dubai business has a healthy pipeline of planned IPOs both in Abu Dhabi and Dubai. EFG Hermes plans to expand its Dubai business and is in the midst of a planned hiring spree, both in asset management and investment banking.

“We are looking at hiring across the board. We definitely believe things are moving in the right direction. We are still working on the final numbers,” Mr Awad said.

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