Bloom Holding targets private placement as schemes progress

Abu Dhabi developer to roll out masterplan for Dh5bn ‘Bloom District’ in autumn

Sameh Muhtadi, chief executive of Bloom Holding. The developer saw low single-digit growth in revenues in the past year, mainly driven by hospitality assets. Victor Besa / The National

Bloom Holding, an Abu Dhabi-based property developer, is in talks over a private placement and expects a deal this year, as it progresses its schemes in the UAE capital – including a Dh5bn ‘mega-community’ masterplan to be finalised this year.

"We are in continuous talks with prospective investors to form a strategic partnership for a private placement, and are hoping for a deal this year – it will be great if that happens," Bloom Holding's chief executive Sameh Muhtadi told The National.

A private placement is a capital raising event in which a company’s shares are sold to a select number of chosen investors, or a single investor, rather than through an initial public offering on a stock exchange. It enables the company to raise new financing for its next chapter of growth.

Earlier this month, Mubadala Investment Company, the Abu Dhabi strategic investment firm, agreed to sell a significant minority interest in its fully owned Spanish oil and gas firm Compania Espanola de Petroleos (Cepsa) to US-based Carlyle Group in the latest private placement by a UAE firm.

Bloom Holding saw low single-digit growth in revenues in the past year, but this was mainly driven by its hospitality division rather than residential or other real estate, which has been suffering a slowdown in the UAE in the past few years amid global economic uncertainty, low oil prices and muted demand, except for affordable property, its chief executive said.

However, the company is eyeing accelerated growth beyond 2019, a year in which it intends to hand over two sizeable mixed-use projects on Abu Dhabi’s Saadiyat Island – Park View, scheduled for handover in the coming weeks, and Soho Square, to follow soon after. It is also working on phase five of its Bloom Garden gated residential community, comprising 240 units, which it intends to launch for sale in the coming months, according to Mr Muhtadi.

Another focus for the private developer is to unveil the masterplan for a Dh5 billion mega-community close to Abu Dhabi International Airport.

The two million square-metre mixed-use project is to comprise housing, retail, food and beverage outlets, schools and medical facilities, and the company plans to submit the concept masterplan for approval by the Abu Dhabi government by the third quarter of this year.

“Hopefully we will break ground on constructing the first phase of the scheme – mainly utilities and other infrastructure – in the early part of 2020,” Mr Muhtadi said.

In the meantime, Bloom is in talks with lenders including Abu Dhabi Commercial Bank (ADCB) over “billions of dirhams” of loan financing for the project, and aims to fund the scheme with a 30:70 mix of equity and debt, he added.

Bloom has appointed global design and urban planning consultancy GHD to undertake the masterplan, and has decided on a rough estimate of between 3,400 and 4,000 residential units for the whole project, depending on how many apartments, townhouses and villas that comprises.

In addition, Mr Muhtadi is courting interest from international and domestic investors in partnering with Bloom to develop specific portions of the masterplan. “These are mainly contractors who want joint ventures with us,” he said. Some of the plots of land will also be sold off entirely to third party developers, he added.

The National reported last year that Bloom was eyeing an IPO to help finance its future growth, but Mr Muhtadi said while this proposal has not been shelved entirely, it is on ice for the year while sales and rental prices in the UAE property market continue to decline, and while regional capital markets remain sluggish.

The private placement is a “logical first step” towards an IPO, or even instead of it, but “it’s not simple, there is much due diligence to do, and it will be great if we can tie up a deal this year”, the chief executive said.