Kuwait-based Esdarat Holding Company plans to list on Nasdaq Dubai in the second half of 2009 to fund real estate development projects worth $2.8 billion (Dh10.2bn), Emirates Business has learned.
Esdarat, which is set to develop the largest private real estate project around the Holy City of Makkah, first announced its intention to go public in June last year.
The company closed a $110 million private placement with Emirates NBD Capita, formerly NBD Investment Bank, in December. But the amount raised in the private placement was only 37 per cent of the original target of $300m.
Imad Awad, Director and Head of Equity Capital Markets at Emirates NBD Capita, said the management had decided to raise the remaining amount through an IPO.
"We are hopefully planning to do it in 2009, that is still our target right now," he added. "You hope for the best and you plan for the worst. But by Q4 we should be able to float an IPO."
Esdarat plans to launch two mega residential projects in Bahrain and Egypt. The $100m Bahraini project will include two 25-storey luxury residential towers. The Egyptian development will involve building a residential city covering an area of six million square metres along the road between Cairo and Alexandria.
The company plans to list on Nasdaq Dubai – formerly the Dubai International Financial Exchange – first and then on the Kuwait Stock Exchange. The aim is to attract a diversified investor base.
Analysts view Esdarat's move as a sign that the IPO market is heading towards a gradual recovery. IPO activity in the Middle East has declined noticeably in the past two months, mirroring investor sentiment and the global economic downturn, according to Ernst & Young's year-end IPO Update. In October and November $22.4m was raised from three regional IPOs compared with $6bn from 10 floatations in the same period in 2007.
Azhar Zafar, Head of Mergers and Acquisitions at E&Y Middle East, said investor confidence and willingness to list had been affected by market conditions.
But despite the drop in the number of listings the pipeline of firms preparing for IPOs remains robust.
"This reflects the new corporate understanding that the journey to an IPO is a transformational process," Zafar said. "Our research shows that outperforming companies start preparing to list a full 12 to 24 months before actually going public."
Imad Ghandour, Chairman of the Information and Statistics Committee at Gulf Venture Capital Association, said: "The process for listing a firm on an exchange is a long one and its alteration means a strategic shift for the company.
"The current turbulence in the local exchanges has been there for only a few months and I doubt that it has yet resulted in a deep and irreversible impact on the appetite of investors."