The world loves The Dubai Mall. News of its 75 million visitors last year prompted one UK newspaper to suggest the mall might be “the best place in the world”.
Now we have the chance to see whether the investment world agrees. Over the next month or so, the small army of international advisers Emaar has hired to market the IPO of the malls business will feed back to their Dubai offices, and a price range for the flotation will begin to emerge.
There is undoubtedly a good business story to tell. Emaar came through the global financial crisis in good shape, and the success of the malls and retail business, especially The Dubai Mall, was a driving force in that recovery, helping to boost overall property values in the emirate.
There were some fears that the IPO might be too big for the Dubai Financial Market to digest, and that cash would be drained from other equities listed there. But the architects of the IPO seem to have factored that in too. The guideline IPO size before was 25 per cent, now lowered to a minimum 15 per cent. That could increase if demand is extraordinary, but it reduces the initial pressure on the market and on investors’ wallets.
Emaar has also stuck by existing investors, allowing them a (small) preferential allocation and, with about 85 per cent of the malls business still owned by Emaar, lessening the pressure on the parent’s share price.
Will the world flock to the shares, like the mall? Despite the marketing teams that will be out working hard in New York, London and Hong Kong, there is no guarantee investors from those places will be keener than regional ones.
The Middle East intuitively understands malls and their business, and the chances are there will be more than enough appetite in the region to make the IPO, and the aftermarket, a success.
fkane@thenational.ae
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