Damac will list on DFM in major boost for UAE stock markets

Damac GDR holders have until September 2 to decide whether to convert their holdings to DFM listed equity. Paulo Vecina / The National

The listing will put Damac in the top 10 of UAE listed companies, with a market capitalisation of about US$3.5 billion, and will give regional retail investors the opportunity to participate in one of the UAE’s most successful companies.

Damac announced yesterday that it was offering investors the opportunity to convert its global depository receipts (GDRs), currently listed on the London Stock Exchange, into ordinary equity and list them on the Dubai market. The move sparked a 6.2 per cent jump in the value of the London stock, which closed at $16.09 per GDR. They were floated in December in London at $12.25 each.

Hussain Sajwani, the founder and executive chairman of Damac, will continue to own about 85 per cent of the company.

“This is another key milestone in our history as we offer investors the opportunity to hold Damac shares traded on the DFM,” Mr Sajwani said. “The offer demonstrates our confidence in our home market of Dubai and our commitment to the DFM, which will allow our large domestic investor base to trade our shares on their local market.

"Those investors who choose not to participate in the offer will continue to hold their GDRs, which will remain traded on the LSE. However, the board of Damac and I strongly encourage eligible holders to accept the offer by tendering all of their GDRs in exchange for Damac Shares. We now look forward to joining other prominent Dubai companies on the DFM as we continue to work hard to create value for our investors."

GDR holders have until September 2 to decide whether to convert their holdings to DFM listed equity. They will be offered 23.0769231 Damac shares per GDR.

The offer is conditional on the Dubai market allowing the conversion to go ahead.

“I’m sure DFM would be motivated to list a successful company like Damac,” said a source close to the company, who declined to be named. “Because the GDRs will remain listed in London, we will continue to comply with LSE regulations, which makes for a good investment case in Dubai.

“We got requests from many existing shareholders to move away from GDRs in order to enhance the liquidity and trading of the stock. Although the proportion traded will remain relatively small, around 15 per cent of the total, it will give retail investors an opportunity to invest, as well as regional institutions who are not very familiar with London-listed GDRs. DFM-listed shares will be much more accessible.”

The DFM has experienced volatility in recent weeks with shares swinging between bull and bear market territory, triggered by investor concern over Arabtec’s outlook and amid high levels of leverage.

The Damac listing will be the first of several new companies on the Dubai market in the second half of the year, including a greenfield IPO for Marka in September and a hotly anticipated listing of Emaar’s retail unit that operates The Dubai Mall.

Damac will not raise any funds in the DFM listing. When Damac listed GDRs last year, Mr Sajwani made nearly $400m from the exercise, which propelled him into the billionaire’s lists as one of the UAE’s richest men.

After a successful career in the wholesale catering business –where one of his biggest clients was the American military during the two wars in Iraq – Mr Sajwani launched Damac to benefit from the boom in UAE property after foreign investors were allowed to buy in the emirates in 2002.

He survived the market collapse of 2008 by careful management of cash and the shelving or postponement of several developments.

The revival of the Dubai property market has pushed Damac to return to upmarket property development, most recently in partnership with some of the world’s biggest luxury brands such as Fendi, Versace and Paramount.

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