Potential developer of Dubai Legoland embarks on London IPO

Merlin Entertainments, the leisure attractions operator that plans to build a Legoland in Dubai, will sell at least 20 per cent of its shares in an initial public offering in London.

The firm yesterday said it would raise £200 million (Dh1.18 billion) from the IPO on the London Stock Exchange and use the funds to pay down its debt.

The owners of Merlin – Kirkbi, a Danish investment company that controls The Lego Group, and the private equity firms Blackstone Group and CVC Capital Partners – will sell a portion of their equity stakes.

“Merlin Entertainments comes to the market with a consistent record of strong growth in both revenues and profits, and bright prospects for the future,” said Nick Varney, the chief executive of Merlin, in a regulatory filing on the bourse’s website.

Europe’s leading theme park operator and the world’s largest after the Walt Disney Company, Merlin operates 99 attractions across 22 countries. It pulled in more than 54 million visitors last year, generating total revenues of £1.07m.

In its filing, Merlin said the development of a Legoland Park in Dubai was one of its future growth highlights. Initially scheduled to open in 2011, the development was delayed after its local partner Tatweer, a leisure property developer, was dissolved in early 2010 as part of a shake-up of Dubai government-controlled companies during the emirate’s debt crisis.

But Merlin has said it remains committed to the attraction.

Merlin operates Legoland Parks in Denmark, Britain, Germany and Malaysia, as well as California and Florida in the US. It also runs the British resort theme parks Alton Towers, Thorpe Park and Chessington World of Adventures.

Kirkbi, which owns 75 per cent of The Lego Group, said it intended to remain a significant long-term investor in Merlin after the IPO.

“Merlin is positioned in the global leisure market, which is forecast to grow at 5 per cent per annum to 2016 and is experiencing a number of attractive trends,” the company said.

It said the growth of the middle class across regions, emerging markets in particular, and the increase in leisure time and spending would boost its business opportunities.

Dubai International Capital, a private equity investment arm of Dubai Holding, had been a key investor in Merlin; it has reduced its stake to 6 per cent from 17 per cent in 2010.

Dubai Holding is a conglomerate owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.

tarnold@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.

Part three: an affection for classic cars lives on

Read part two: how climate change drove the race for an alternative

Read part one: how cars came to the UAE

What is blockchain?

Blockchain is a form of distributed ledger technology, a digital system in which data is recorded across multiple places at the same time. Unlike traditional databases, DLTs have no central administrator or centralised data storage. They are transparent because the data is visible and, because they are automatically replicated and impossible to be tampered with, they are secure.

The main difference between blockchain and other forms of DLT is the way data is stored as ‘blocks’ – new transactions are added to the existing ‘chain’ of past transactions, hence the name ‘blockchain’. It is impossible to delete or modify information on the chain due to the replication of blocks across various locations.

Blockchain is mostly associated with cryptocurrency Bitcoin. Due to the inability to tamper with transactions, advocates say this makes the currency more secure and safer than traditional systems. It is maintained by a network of people referred to as ‘miners’, who receive rewards for solving complex mathematical equations that enable transactions to go through.

However, one of the major problems that has come to light has been the presence of illicit material buried in the Bitcoin blockchain, linking it to the dark web.

Other blockchain platforms can offer things like smart contracts, which are automatically implemented when specific conditions from all interested parties are reached, cutting the time involved and the risk of mistakes. Another use could be storing medical records, as patients can be confident their information cannot be changed. The technology can also be used in supply chains, voting and has the potential to used for storing property records.