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29 March 2024

Emaar Malls IPO weighs on Dubai

Published
By Reuters

A rush by Dubai's retail investors to take part in the initial public offer of Emaar Properties' malls unit put pressure on the emirate's stock market on Tuesday, while successful fund-raising for the Suez Canal expansion lifted stocks in Egypt.

Emaar said late on Monday that institutional investors had committed to buying all the shares offered to them in the flotation of its shopping malls business, only a day after the IPO was launched.

Dubai's largest property developer plans to raise as much as Dh5.8 billion ($1.58 billion) from the offer of a 15 per cent stake in Emaar Malls Group (EMG), which is expected to be the Gulf's biggest stock sale since 2008.

Emaar aims to sell about 30 per cent of the offered shares to retail investors in a separate tranche, and Monday's announcement appeared to have prompted them to submit more purchase applications, leading them to cash out of other stocks to raise money. Emaar has said it will allocate shares on a pro rata basis in case of oversubscription.

Dubai's index fell 0.7 per cent while shares in Emaar itself slid 1.8 per cent. Retail investors were net sellers of stocks, according to bourse data.

"It's a big IPO so some investors have to manage their allocations and may have to offload some parent company shares," said Harshjit Oza, property and banking analyst at Naeem brokerage in Cairo.

"The stock has been very volatile and I think you're going to see this volatility until EMG gets listed."

The offer closes on September 24 for retail investors and on September 26 for institutional investors, with EMG shares then listing on the Dubai Financial Market on October 2.

Abu Dhabi's bourse slipped 0.1 per cent because of banks. Union National Bank fell 2.6 per cent, Abu Dhabi Commercial Bank edged down 0.9 per cent and National Bank of Umm Al Qaiwain tumbled 7.4 per cent.

Qatar's benchmark hit an all-time intra-day high of 14,255 points but closed flat as Qatar National Bank  pulled back 1.9 per cent, erasing the previous day's gains and offsetting the rise of other stocks.

 SAUDI, EGYPT

Saudi Arabia's index rebounded after a few days of profit-taking and rose 0.6 per cent. Food maker Savola Group  was the main support, rising 2.1 per cent after the company said it had picked JP Morgan to advise on its potential purchase of a stake in Kuwait Food Co.

Egypt's bourse was the best performer in the region, rising 0.9 per cent after the country raised the $8.5 billion it needs to fund a project to expand the Suez Canal in just eight days.

The money came from the sale of investment certificates backed by the central bank and the government.

"It shows that things are back on track and people have confidence in the economy," said Naeem's Oza.

Officials have said the expansion will boost annual revenues from the Suez Canal, which is operated by the state-owned Suez Canal Authority, to $13.5 billion by 2023 from $5 billion currently.

Canal revenues are a vital source of hard currency for the country, which has suffered a slump in tourism and foreign investment since the 2011 uprising that toppled longtime ruler Hosni Mubarak.

 TUESDAY'S HIGHLIGHTS

DUBAI: The index edged down 0.7 per cent to 4,985 points.

ABU DHABI: The index slipped 0.1 per cent to 5,150 points.

QATAR: The index was flat at 14,138 points.

EGYPT: The index added 0.9 per cent to 9,534 points.

SAUDI ARABIA: The index rose 0.6 per cent to 10,993 points.

KUWAIT: The index climbed 0.4 per cent to 7,573 points.

OMAN: The index edged up 0.2 per cent to 7,488 points.

BAHRAIN: The index added 0.2 per cent to 1,469 points.