Emaar Development, the real estate development arm of Dubai’s Emaar Properties, raised Dh4.82 billion from its IPO, the biggest listing since 2014 and the third largest ever offering on a Dubai-based exchange.
“Today marks an important milestone for Emaar Development, as the strong retail and institutional investor interest in our IPO places us closer to achieving our vision for the future,” said Emaar Properties chairman Mohamed Alabbar.
The company priced the sale of 800 million shares – equating to a 20 per cent stake in the firm - at Dh6.03 per share, according to a statement on the Dubai Financial Market (DFM) on Thursday.
Emaar Development’s Dh4.82 billion IPO is the largest on the DFM since the 2014 listing of fellow Emaar Properties subsidiary Emaar Malls, which raised Dh5.8bn. It is the third largest Dubai listing after Emaar Malls and the US$4.96 billion IPO of DP World on Nasdaq Dubai in 2007.
The Dh6.03 price came in at the middle of the original pricing guidance of Dh5.7-6.9 per share announced in early November, which was subsequently revised to Dh6.03-6.70 per share. Pricing at the maximum level would have resulted in an IPO of Dh5.52bn.
“Emaar Development has a clear strategy for growth, a strong sales backlog, high cash flows, and targeted dividends of $1.7bn to be paid over the next three years – indicating strong dividend yield, especially in comparison to our peer group," Mr Alabbar said.
“We are highly confident in the future of our group, and the benefits that this offering will create for shareholders.”
Institutional investors were allocated 93.8 per cent of the 800 million shares on offer, with retail investors buying the remaining 6.2 per cent subscription, the company said. It did not disclose to what extent the offering was oversubscribed.
Shares in Emaar Properties fell following the announcement, opening one per cent lower, eventually closing down 0.3 per cent at Dh7.86.
“There is no clarity yet on the special dividend to be paid to shareholders of Emaar Properties, and that is causing selling pressure in the market,” Marwan Shurrab, head of high net-worth and retail equities brokerage at Al Ramz Capital in Dubai, told Bloomberg.
“The market has been pricing in a lower special dividend range, between AED 0.7-0.8 per share, and that is less than what was initially expected” when the unit IPO was announced.
“There still is no clarity on by how many times each of the tranches were over-subscribed. People want to know the details, what was the appetite from each side.”
Trading in the stock is expected to commence on the DFM on November 22.
Emaar Development is only the second company to IPO on the DFM since the debut of DXB Entertainment in November 2014. Only one company - insurer Orient UNB Takaful - has listed on DFM since, with its shares going untrading since their June debut.
The Abu Dhabi National Oil Company (Adnoc) announced plans earlier this week to list a minority stake in Adnoc Distribution, its services stations operator, on the Abu Dhabi stock exchange in December.