MENAFN - Khaleej Times
Dubai - Damac eyes $500m in UK IPO
(MENAFN - Khaleej Times) Dubai-based luxury real estate developer Damac Properties is to raise 500 million from an initial public offering, or IPO, in London.
The developer, the latest Gulf company seeking to list on London stock Exchange, said the IPO has been timed to take advantage of bullish equity markets.
Al Firdous Holding and Sahira Holding, controlled by the founder and chairman of Damac, Hussain Sajwani, will offer global depositary receipts, or GDRs in a new company called Damac Real Estate Development Ltd. Each GDR - a financial instrument often used by emerging market companies in market flotation - will be worth three ordinary shares of the company.
In a statement issued in London, Damac said Citigroup and Deutsche Bank, along with Samba Capital and Investment Management and VTB Capital, are managing the IPO.
Sajwani, who believes the market is primed for sustainable growth supported by a strong rental market, will remain Damac's chairman and chief operating officer, according to the filing.
"A listing on the London Stock Exchange is the next step in our evolution as we take the company to the global markets and allow international investors the opportunity to participate in our continuing success and ambitious plans for growth," said Sajwani.
Damac's move is seen by market analysts as an opportunity to gauge investor confidence in the Gulf's steadily recovering property market. The developer of several iconic projects said it expects to list shares in December following two weeks of roadshows that are scheduled to take place in London, the Gulf, the US and mainland Europe.
Buoyed by positive signs of an impending property revival, Damac, like most other master developers in the region, has launched several prestigious projects including Hollywood-themed apartment towers and a Trump International golf course this year.
Damac, which has assets valued at 2.3 billion, reported a first-half profit of 332 million, up from 212.1 million in all of 2012, according to the filing. Gross profit margins averaged 44 per cent in the three years through 2012 and 64 per cent in the first half of this year, the filing said.
"Our biggest operations will continue to be in Dubai," Sajwani was quoted by news agencies. "The Middle East as a territory, especially Saudi Arabia where we have already developments and operations, will continue to grow for us."
"Our investor base is diversified for [property] buyers so the investor base will be large for the offering," Sajwani was quoted as saying when asked why he was choosing London over Dubai.
"We think Dubai is in the beginning of a growth cycle. Demand is now [exceeding] supply, which is why rents are going up."
Damac, which has partnered with Italian fashion house Fendi and Paramount Pictures, is expanding outside its home market with towers in cities across the region including Abu Dhabi, Riyadh, Jeddah, Beirut, Amman and Baghdad.
Driven by rising investor confidence in the backdrop of an optimistic economic outlook, residential house prices and rents in the UAE have risen by more than 20 per cent over the past 12 months.
Cautious about the need to ward off the pitfalls of another property bubble, as warned by the International Monetary Fund, Dubai has brought in new regulations to deter speculators and property flipping.
Analysts also believe that investors would tend to compare Damac to Emaar Properties, whose stock is up 62 per cent year-to-date and has a trailing price-to-earnings ratio of 15.9 times against 14.3 times for the wider bourse.
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