Emaar Malls IPO pitch in full swing

Emaar is offering a minimum of 15 per cent in Emaar Malls Group, its most profitable business, which includes the world’s biggest mall. Sarah Dea / The National

Preparation for the initial public offering of Emaar Malls – the biggest share offering in the UAE since 2007 – moves into top gear today.

Emaar Properties and its advisers will publish a full prospectus for the IPO, giving further financial figures on which global and UAE investors will base their decision of whether to buy shares in the IPO. An indicative price range will also be set, although the final flotation price will not be determined until after the offer closes on September 26.

One source, on condition of anonymity, indicated a possible initial price range of Dh2.50 to Dh3 per share, though he emphasised that was still to be decided.

The owner is offering a minimum of 15 per cent in Emaar Malls Group (EMG), its most profitable business, which includes the world’s biggest mall. The shares will begin trading on the Dubai Financial Market on October 2.

Final details are to be agreed at an Emaar board meeting in Dubai. One adviser, also speaking anonymously, said the Securities and Commodities Authority, the regulator, had agreed to waive the requirement to produce detailed profit forecasts.

The advisers are taking three factors into account when deciding on the price range. EMG has already said it would offer 1.9 billion shares to raise a minimum of Dh5.3bn, which is pledged to be paid as a dividend to existing shareholders – including the Government of Dubai. That would imply a price of about Dh2.80 per share.

Second, the net asset value of the business is also taken under consideration. The property consultant Jones Lang Lasalle, one of EMG’s advisers on the IPO, has valued the business at Dh33.2bn, implying a price of Dh2.60 per share, the adviser said.

Finally, advisers will assess international and regional demand for the shares, and the extent to which a premium is justified. This is the first time an IPO on the DFM is being priced according to the book-building process used by most international markets.

Another adviser said: “These are high-quality assets from the market leader in a growing market. You would expect some kind of premium to reflect that.”

The international roadshow to market the IPO also gets under way this week. EMG has hired 15 banks and financial institutions to act as advisers, book runners or official receivers in the offering, as well as three senior law firms and international accountants.

The roadshow will begin in the GCC, where advisers expect heavy demand for the issue – especially in the UAE, where first-time retail investors can apply for shares through banks and the DFM online portal, iVestor. Emirates NBD customers can also request shares using the lender’s cash machines.

The IPO will also be sold in Asia, where demand is especially expected in Hong Kong and Singapore, and Europe’s leading financial market in London.

The source said it was still undecided whether to send a big delegation to the United States, but the presence of three big American banks as joint global coordinators – Merrill Lynch, JP Morgan Securities and Morgan Stanley – probably meant meetings with specific potential shareholders in New York were likely during the two-week marketing period.

If demand for the issue is exceptional, EMG has the option of increasing the number of shares on offer or setting a higher final price. But it is thought that advisers would be reluctant to do so, as it would affect the “after market” (the demand for shares once early trading volatility has stabilised).

Current shareholders in Emaar Properties, for whom about 10 per cent of the new issue has been reserved, will retain equity and economic interest in EMG through their 85 per cent majority holding. They will also have the right to take part in the possible forthcoming IPO of Emaar’s Egyptian business, which is likely to take place on the Cairo market next year.

A 24-hour call centre for the malls IPO is in operation for retail investors on (800) 364 476.

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