Five private joint stock firms with major holdings in Abu Dhabi’s real estate market plan to float initial public offerings (IPOs) and list their shares on the UAE’s bourses.
Al Qudra, Manazel, Al Rayan, Iskan and Ishraq are taking steps to transform themselves into listed companies to raise capital to finance major projects – estimated at more than Dh99 billion – both domestically and abroad.
The top officials at the five firms said the IPOs would result in a major boost for Abu Dhabi’s economy. They added that the rapid development of giant real estate ventures – funded by the listings – would meet the growing demand for accommodation in the UAE capital.
Going public will also allow more residents to profit from the building boom by distributing profits across larger segments of society, they said.
However economist Rida Muslim, chairman of Truth Economic Consultants, did not see the move as entirely positive for the emirate.
He acknowledged that the firms had matured to a point where they were prepared to offer shares publicly and that the capital raised would allow the companies to expand their project base.
The IPOs would also attract foreign investors who were currently pouring a lot of money into the UAE economy, said Rida.
He called on the regulatory authority, the Securities and Commodities Authority, to take its time in issuing approval for the share offers.
“This time is unsuitable for the transformation of companies into pubic joint stock companies. Going for IPOs is very risky. It will lead to the withdrawal of considerable liquidity from the market,” he said.
Al Qudra Holding
Al Qudra Holding plans to offer the UAE’s second largest IPO. It aims to raise around Dh3.7 billion to finance its expansion plans and raise its capital to Dh24.5bn.
The company will issue 55 per cent of its capital in new shares in phases. The first phase will start with around 25 per cent of the company’s shares, with each share valued at Dh1.
The company was established in 2005 as a private firm in Abu Dhabi with capital of Dh550 million and has made record profits.
It works currently in the market with Dh600m in capital. And its net operational profit is expected to rise from Dh703m in 2007 to Dh957m in 2008, Dh1.372bn in 2009 and Dh1.694bn in 2010. The last general assembly agreed to distribute 45 per cent of 2007 profit in cash to shareholders.
The company increased its subsidiaries from four to 30 and is active in the real estate, industry, transport and facilities sectors.
The company has announced it will carry out projects worth Dh150bn during the next few years, the most important of which are Dana Abu Dhabi, Desert Towers and Al Ain Al Faida.
The company won a Dh4.9bn contract for treatment of sewage water. This project is a first for Abu Dhabi Water and Electricity in the field of private sewerage projects.
Al Qudra Holding owns the Middle East’s biggest farm that produces organic vegetables. It was selected by the Higher Corporation for Specialised Economic Zones to set up a labour city in Al Ain accommodating around 22,000 workers, which will be completed within two years.
Manazel Real Estate
Manazel Real Estate, headquartered in Abu Dhabi, was established in 2005 with a capital of Dh2.5 billion. Its five-year plan includes projects worth Dh40bn inside and outside the UAE.
Its first project in the UAE is Al Reef Villas on an area of 10 sq km, near Abu Dhabi International Airport. All of the project’s villas and apartments were reserved within a few hours of launch.
The company has also rolled out other projects, such as Al Reef Downtown, Desert Rose, Prestige Tower and Dunes Village. The latest project, Dunes Village, is located on an area of 51,100 sq m and includes 19 residential towers. It is due to be completed within 24 months.
In the beginning of 2008 the company started the implementation of the Amman Garden project in Jordan on an area of 500,000 sq m and with an investment of Dh1.5bn. The project includes 1,700 residential units and targets medium-income people, including Jordanian nationals, Jordanian expatriates in the UAE, UAE nationals and foreign investors who wish to own residential units in Jordan.
During its participation in Cityscape, the company launched a residential and tourist project in Tunisia worth Dh5bn.
Ishraq, which was established by UAE national and Saudi investors as a private joint stock real estate developer with a capital of Dh1bn, is also looking to launch an IPO.
The company launched its first real estate project, Marina Rise, in April 2007 at Al Reem Island with an investment of Dh7.5bn. On the same date it signed an agreement with Abu Dhabi Islamic Bank for the bank to register and issue the certificates of Ishraq’s shareholders.
Ishraq declared that it would develop part of the Marina Rise project, while the remaining parts would be offered to investors.
Marina Rise overlooks the island’s marine front and is located on an area of 1.1 million sq m. It includes 21 luxury residential, commercial and hotel towers, including two four- and five-star hotels, a giant shopping mall and villas.
In a statement to Emirates Business, Sulaiman Al Dal’an, General Manager of Ishraq, said: “The company aims to strengthen its pioneering role in real estate boom seen in Abu Dhabi through the launch of other distinguished real estate developments soon to meet increasing demand for accommodation in Abu Dhabi.”
The company provided finance solutions for investors who wish to buy land or own residential and commercial units at Marina Rise in conjunction with Union National Bank and Al Wifaq Finance Company.
Some 70 per cent of finance is provided for investors for 20 years. Ishraq has divided the project into two basic parts. The first is for sale for investors. The second part is dedicated for a residential and commercial project on a total area of 220,000 sq m, where Ishraq will construct a hotel and office towers.
The Abu Dhabi Executive Council approved the creation of the housing finance company Iskan as a private joint stock firm headquartered in Abu Dhabi with a capital of Dh2.5 billion and the company’s assets have risen by 30 per cent since its launch in 2006.
The company’s board agreed in March 2006 to start considering an IPO and called for top investors, government and private establishments in the UAE and GCC countries to buy shares in the company.
Iskan has unveiled property developments in Dubai and Fujairah.
CEO Khalid Al Sha’ali has confirmed that the company is currently attempting to transform itself into a public joint stock company.
Over the next three years it will launch projects worth Dh20bn.
Al Sha’ali confirmed that the company will announce soon the construction of two towers in Mohammed bin Zayed City in Abu Dhabi along with two other towers in Dubai.
Projects already under way – with an investment of Dh1.4bn – in Fujairah include the Golden Sand Beach and Al Fanar Towers. The latter is located in the heart of Fujairah city and will cost Dh1bn.
Al Rayan was established as a private joint stock company with capital of Dh500m. The value of its investments has grown to reach more than Dh2.5bn. It has a number of investment projects scheduled to be implemented over the next three years with investments of Dh6bn.
Some 90 per cent of the company’s investments are currently in the real estate sector, seeking to benefit from the increasing demand for accommodation in Abu Dhabi and the sharp shortage of supply.
The company has other investments in shares, securities, alternative energy and logistics. The board decided recently to restructure the company to concentrate on three sectors – real estate, services and industry.
Currently Al Rayan is carrying out four property developments.
The first is a residential city for workers in Al Mussafah Industrial. It will accommodate around 25,000 workers and cost Dh850m.
The second project is a temporary residential project for workers. It will accommodate around 32,000 workers and cost Dh418m. The third project is a Dh200m building at Dana Abu Dhabi project. The building will have unfurnished apartments, furnished studios and a market.
The fourth project is located in the exhibition grounds in Abu Dhabi.
It will contain a hotel, offices and shops. The project’s cost ranges between Dh500m and Dh600m.
In the recent past, the joint stock company unveiled plans to construct a residential city in Abu Dhabi with a value of Dh1bn.
Fardan Hasan Al Fardan, chairman of Al Rayan, has announced that the company is hoping to launch an IPO before the end of the year.