November 16, 2017 / 6:07 AM / a year ago

Emaar Properties to raise $1.3 billion in development unit's IPO

DUBAI (Reuters) - Emaar Development, a unit of Dubai property firm Emaar Properties, priced its initial public offering below the mid-point of an indicative price range, valuing the deal at $1.31 billion in Dubai’s first major IPO in three years.

A logo of Dubai's Emaar Properties is seen at an under-construction building in Dubai, UAE, March 3, 2016. REUTERS/Ahmed Jadallah/File Photo

The assets of Emaar Development include 49 units in Dubai’s Burj Khalifa, the world’s tallest tower, and a number of projects in Dubai’s prime districts.

Emaar Development priced the IPO at 6.03 dirhams, according to a company statement on Thursday, against an indicative range of 5.7-6.9 dirhams per share set earlier this month..

A fund manager, who asked not to be named, said bookrunners had increased the lower end of the price range to 6.03 dirhams a share from the original 5.70 dirhams overnight as books closed.

Emaar Properties is selling a 20 percent stake or 800 million shares in its local development unit in the first major listing in Dubai since late 2014, when Emaar Malls raised about $1.6 billion.

The pricing would give the listed company a market capitalization of 24.1 billion dirhams, equal to its net asset value estimated by property consultancy JLL.

Marie Salem, director of capital markets at FFA Dubai, said the lower pricing was to attract more retail investors to the IPO and leave some money on the table for investors.

“This is to give a chance to retail investors, who were reluctant during the initial days of the subscription period,” said Salem.

“If you value the company it should have priced higher than that and I heard certain institutions had higher pricing for the IPO.”

Shares of Emaar Properties were up 1.5 percent in morning trade.

Emaar Development had said it aimed to distribute aggregate dividends of no less than $1.7 billion during the next three financial years, with the first post-IPO dividend to be paid in the third quarter of 2018.

Emaar had said the IPO offers the opportunity for its shareholders - including the UAE government - to unlock the true value of the development business, and allowed potential investors to invest in a pure-play property developer.

Bank of America Merrill Lynch, EFG Hermes, Emirates NBD Capital PSC, First Abu Dhabi Bank and Goldman Sachs International are joint global coordinators for the offering. Rothschild Ltd is acting as financial advisor.

Reporting by Saeed Azhar and Tom Arnold; Editing by Stephen Coates

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