Emaar Unit Is Said to Plan IPO at Premium of as Much as 20%

Developer plans to sell 800 million shares from November 2

31/10/2017 09:26 AST

Emaar Properties PJSC is expected to offer shares in its United Arab Emirates development business at a 10 to 20 percent premium to the unit's net asset value, according to three people familiar with the plans.

The lead managers on the initial public offering are estimating Emaar Development LLC's fair value at between 26 billion dirhams ($7.1 billion) and 33 billion dirhams, two of the people said, asking not to be identified because the information isn't public. A 10 to 20 percent premium would imply an offer price of 6.63 dirhams to 7.23 dirhams a share, according to Bloomberg calculations.

A spokesman for Emaar said the company wouldn't comment on rumors or speculation.

Emaar Properties, which spearheaded a building boom in the emirate over the past 15 years and built the world's tallest skyscraper in Dubai, will sell 800 million shares, or 20 percent of its real-estate development business, starting Nov. 2. The sale will close on Nov. 15 and the company expects to announce final pricing a day later. Shares will be listed on the Dubai Financial Market on Nov. 22.

Net Asset Value

Emaar said Oct. 22 the unit had a net asset value at 24.1 billion dirhams at the end of September, or 6.025 dirhams a share. Damac Properties Dubai Co. PJSC, a competitor to Emaar, trades at a 16 percent premium to net asset value, according to Bloomberg calculations.

Emaar Development is targeting the distribution of aggregate dividends of no less than $1.7 billion, to be paid over the next three financial years ending Dec. 2020. Annual dividend payments after that are expected to increase further due to lower leverage and higher expected cash flow from operations, it said.

Given its dividend plans, Emaar Development may price at the top end of the range, though the overall price range could move depending on demand, one of the people said.

Bloomberg