Al Habtoor announces Dh2bn worth of new Dubai projects as IPO is weighed up

Al Habtoor Group, the Dubai-based conglomerate, has announced more than Dh2 billion worth of new projects as it continues to study the prospects for an initial public offering .

Khalaf Al Habtoor, chairman and founder of the hotels, property and motor group, said that he was “looking at scenarios” for an IPO, but that the new developments – a hotel, an upmarket residential development and a polo centre – were not dependent on IPO financing.

“We can fund these projects through cash flow and a small amount of local bank finance,” he said.

On the prospects for a listing, Mr Al Habtoor said: “No decision has been taken. I have been thinking about this question for 20 years, and have hired 10 or 11 firms over the years to diagnose Al Habtoor. But that doesn’t mean we are going to go for an IPO. We are considering it, but we do not have to go for an IPO.”

Mr Al Habtoor also revealed that the group had been in exclusive talks to buy three of London’s top hotels – the Berkeley, Claridge’s and the Connaught – but walked away from a deal when the owners, the property and media tycoons Sir David and Sir Frederick Barclay, decided not to sell.

“The deal is off,” he said, although an aide suggested the talks could be revived. The three hotels could cost as much as US$1.7bn, and would be by far the biggest overseas investment by Al Habtoor.

Reports last summer said Al Habtoor was part of a “Middle East consortium” hoping to buy the hotels, but Mr Al Habtoor said: “We were on our own”.

Al Habtoor is close to buying the Abraham Lincoln hotel in Springfield, Illinois, he confirmed.

A deal could be announced next week for an undisclosed price. Other hotel acquisitions in the US and Europe were also being considered.

The new projects in Dubai are a significant addition to Al Habtoor’s backlog book, which already contains the huge project for three hotels, a Las Vegas-style theatre, and residential and retail facilities on the site of the demolished Metropolitan hotel. The hotels, to be operated by Starwood, are due to open next year.

Al Habtoor is reviving the Metropolitan – its first hotel in Dubai in 1979 – on a different site in one of the new projects, as a four-star boutique hotel planned on Sheikh Zayed Road, with extensive leisure and retail facilities.

“When we closed the Metroplitan, I promised our regular customers that I would one day revive the Red Lion pub,” Mr Al Habtoor said. “Today I am delivering on that promise.”

The hotel will have 334 rooms and suites and is scheduled to open in 2016.

Alongside the new hotel site Al Habtoor also unveiled a residential development, Oasis Villas, consisting of 74 units of four, five and six-bedroom villas, also due for completion in 2016. All the properties will be for rental.

The third project announced is the Al Habtoor Polo Resort and Club, a five-star hotel of 136 rooms and 162 luxury villas, in addition to a polo academy and stables for 500 ponies, as well as three polo fields, on a 6 million square feet site near the Dubai-Al Ain road.

“By adding a dedicated resort for polo, the sport of kings, we are demonstrating our intent to enhance further the quality and variety of our assets,” Mr Al Habtoor said.

The new projects are part of what he called the “aggressive growth plan” of recent years. Total investment in the UAE in the past two years has amounted to more than Dh15bn, he added.

Mr Al Habtoor said that over the past three years, total revenue growth was 37 per cent, at an annual average of 12.5 per cent growth. Total net worth over the same period jumped 20 per cent.

In the next five years, he forecast revenue growth would jump 32 per cent per year, with net worth growing 85 per cent.

The IPO under consideration could involve 25 per cent of the group equity for a market value of $2.5bn, banking sources have indicated.

fkane@thenational.ae

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