Dubai’s Emaar announces intention to float Egypt unit on Cairo bourse

Show homes in the Street of Dreams at Emaar Misr's Uptown Cairo development. Stephen Lock / The National

Emaar Properties plans to float its Egyptian unit on Cairo’s stock market by the second half of June to fund property development and increase its land bank in the country.

The initial public offering of Emaar Misr will include the sale of up to 600 million shares, equal to 12.99 per cent of the firm’s post-offer share capital, the Dubai parent company said.

Emaar Properties will hold a minimum of 87 per cent of Emaar Misr’s total post-offer share capital.

The offer price per share will be determined through a book building process, in which bids are collected from investors and the offer price is determined after the bid closing date. That is instead of a fixed-price share sale, which is typical in the Arabian Gulf.

Emaar Misr’s offering will include two parts: a public sale to retail investors in Egypt and a private placement to institutional investors in several countries, including Egypt. Retail investors will buy the share at the offer price.

"The injection of new capital will allow Emaar Misr to continue to pursue new growth targets," said Mohammed Alabbar, the chairman of Emaar Properties.

Emaar Misr intends to use the proceeds from the IPO towards its non-residential developments in Egypt, which include the Emaar Square and Mivida projects in Cairo, and the marina and hotels in the Marassi project on the north coast near Alexandria.

Part of the proceeds will be used to pay for pre-launch costs for the Cairo Gate mall on the Cairo-Alexandria road. The proceeds will also be used to buy undeveloped land plots.

Emaar Misr revenue last year grew 119 per cent to 2.6 billion Egyptian pounds (Dh1.25bn). It has a land bank of 15.4 million square metres, distributed among four main locations in Cairo and the Mediterranean coast.

Last year, Emaar Properties floated Emaar Malls Group, its retail unit, in an offering that raised US$1.6bn.

The consultancies PwC and EY have both highlighted the renewed investor confidence in Egypt in two separate reports.

“The ongoing economic recovery and increasing stability in Egypt have encouraged capital market activity,” said Mayur Pau, EY’s regional head of IPOs.

“This is supported by government initiatives to stimulate the economy, including a cut in energy subsidies last year, an improved tax regime and new infrastructure projects such as the Suez Canal development project.”