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Why Emaar Malls IPO could be a success
(MENAFN- Arab News) Emaar Malls Group is offering 15.4 percent of its shares in an initial public offering (IPO) with an estimated value in excess of $1.5 billion.
This will give Emaar an opportunity to generate at least $3 billion in additional liquidity from the sale of another 30 percent if and when needed while still retaining control which makes it a self-financed company and fully independent company.
This means that the newly listed entity may enjoy better credit ratings and be able to leverage itself more and at better conditions than its parent Emaar Properties.
According to analysts a fair value in the post-IPO market is AED3.14 which is a 10 percent premium above the AED2.50 AED2.90 at which the price is expected to be fixed on Sept. 29 with trading in the stock beginning on Oct. 2.
However there is great demand for the issue in the market and there could be a spike of AED3.50 to perhaps even AED4 when trading in the stock begins although it is expected to be temporary only.
Signs for this IPO to be a success could not be any clearer.
Today markets are very liquid and have been waiting for quality IPOs. Business malls are an interesting industry given the current size and growth potential of the malls business. Emaar Properties is a $20 billion company with diversified real estate and development activities in several countries worldwide.
A spokesman for ASDA'A Burson-Marsteller the designated PR agency for the Emaar Malls IPO said that his company is providing strategic counsel on how to position the business in the public eye both in the GCC and internationally.
So far no pure mall stocks have been listed in Dubai. A success will surely increase other owners' appetite to follow Emaar's example.
As far as Tawdaul the Saudi stock exchange is concerned some analysts believe that the Emaar IPO may take some liquidity away in the short term but that it will also help to encourage other companies to consider IPOs in the region in the mid- to long-term.
However a Saudi lawyer specialized in capital markets has a different view: 'I don't think it will have much effect because the Saudi Emaar and UAE Emaar Malls Group are different companies.
Other regional real estate companies will offer shares to the public; they have already done so including Emaar. The appetite for IPOs depends on the perceived risk and offered reward. It seems that this company specializes in malls and there has been strong institutional support even though the institutional portion of the offering was 60 percent which is good sign for Emaar.'
This will give Emaar an opportunity to generate at least $3 billion in additional liquidity from the sale of another 30 percent if and when needed while still retaining control which makes it a self-financed company and fully independent company.
This means that the newly listed entity may enjoy better credit ratings and be able to leverage itself more and at better conditions than its parent Emaar Properties.
According to analysts a fair value in the post-IPO market is AED3.14 which is a 10 percent premium above the AED2.50 AED2.90 at which the price is expected to be fixed on Sept. 29 with trading in the stock beginning on Oct. 2.
However there is great demand for the issue in the market and there could be a spike of AED3.50 to perhaps even AED4 when trading in the stock begins although it is expected to be temporary only.
Signs for this IPO to be a success could not be any clearer.
Today markets are very liquid and have been waiting for quality IPOs. Business malls are an interesting industry given the current size and growth potential of the malls business. Emaar Properties is a $20 billion company with diversified real estate and development activities in several countries worldwide.
A spokesman for ASDA'A Burson-Marsteller the designated PR agency for the Emaar Malls IPO said that his company is providing strategic counsel on how to position the business in the public eye both in the GCC and internationally.
So far no pure mall stocks have been listed in Dubai. A success will surely increase other owners' appetite to follow Emaar's example.
As far as Tawdaul the Saudi stock exchange is concerned some analysts believe that the Emaar IPO may take some liquidity away in the short term but that it will also help to encourage other companies to consider IPOs in the region in the mid- to long-term.
However a Saudi lawyer specialized in capital markets has a different view: 'I don't think it will have much effect because the Saudi Emaar and UAE Emaar Malls Group are different companies.
Other regional real estate companies will offer shares to the public; they have already done so including Emaar. The appetite for IPOs depends on the perceived risk and offered reward. It seems that this company specializes in malls and there has been strong institutional support even though the institutional portion of the offering was 60 percent which is good sign for Emaar.'
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