Dubai developer Nakheel mulls IPO once liabilities are cleared

Ali Rashid Lootah, the chairman of Nakheel. Sarah Dea/The National

Nakheel, the property group behind some of Dubai’s most glamorous projects, is considering a stock market flotation once its financial restructuring has been worked through.

Ali Rashid Lootah, the chairman of the company behind the Palm Jumeirah and The World developments, revealed in an interview with The National that an initial public offering could go ahead once the company’s liabilities hd been cleared in 2018.

“At the moment we are looking at meeting commitments to lenders and investors, but we will look at an IPO in the future.

“In 2018 it could be possible, if markets allow. At the moment we are under the constraints of the restructuring agreement, and we are trying to grow the value of the assets and the cash generation of the company. But everything is possible,” he said.

Based on Nakheel’s latest results, and valuing the company at a multiple of 10 times annual profits, an offering could achieve an approximate market capitalisation of Dh25 billion.

Mr Lootah, who is credited with reviving Nakheel after the financial crisis of 2010 when it was owned by Dubai World, also said that he was in discussions with the company’s bank creditors to refinance some Dh8bn of debts which were the subject of a crucial restructuring three years ago.

“We’re more than confident that we can meet the repayments, from cash flow and profits. We’re talking to the banks to get a better deal; it’s always good to have a better deal in hand. We would not want to leave it [a refinancing] until the last minute. We wanted to start talking early to ensure a better rate of interest.

“The terms for Nakheel back then [in 2010] were not easy, but we had to accept them,” Mr Lootah said.

The ability to refinance bank debt on more favourable terms demonstrates the extent of Nakheel’s financial turnaround since the crisis days.

Nakheel also has Dh4.4bn sukuk, or Islamic bond, debt that will mature between 2015 and 2018. So far, the company has not missed any sukuk maturities.

Mr Lootah added: “Now the banks are taking us more seriously. We are outperforming the restructuring plan agreed back then.”

After a leap in profits at the nine-month stage to Dh1.77bn, full-year profits could be 50 per cent ahead of last year. Mr Lootah has committed the company to a minimum of 20 per cent annual growth for the future.

The first new project begun since the crisis, the Palma Residences on Palm Jumeirah, is to be handed over next year. Nakheel is also planning major new developments on the Palm, on Deira Island and at Al Furjan, near the site of the Expo 2020 business fair.