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21 February 2024

Emaar MGF IPO seeks to raise Dh3bn

Emaar's Indian venture is valued at more than $3.32bn. (EB FILE)

By Sachin Dave

Emaar MGF Land, the joint venture company between Emaar Properties and MGF Development India, is awaiting regulatory approval for its Indian IPO and is set to raise up to Dh3.08 billion from the Indian capital market in two tranches between March and May this year, industry analysts told Emirates Business.

According to the company's Draft Red Herring Prospectus, Emaar MGF proposes to raise a total of Rs38.50bn ($830m, Dh3.08bn) from the Indian market, which values Emaar's Indian venture at more than $3.32bn – considering the fact that the Indian regulator mandates that the issue size be less than 25 per cent of the post-issue capital of the company. (The final valuation could be much higher depending on the price-band that the company sets for its shares and market appetite for the issue.)

However, the company confirmed that it might raise between 10 and 60 per cent of the total sum in a pre-IPO placement to qualified institutional buyers. An Emaar MGF spokesperson, replying to an email query, said: "The company may consider a pre-IPO placement. If the pre-IPO placement is completed, the size of the issue will be reduced to the extent of such pre-IPO placement, subject to a minimum issue size of 10 per cent of the post issue paid-up equity share capital of the firm and adherence to prevailing regulations."

Emaar MGF had applied for the necessary approval from the Indian market regulator Securities & Exchange Board of India (Sebi) in October last year and is expected to soon get the go-ahead.

"[Sebi] is taking a cautious approach towards realty IPOs. But most of the real estate firms who have applied for the IPO, including Emaar MGF, are expected to get the required permission anytime between March and May," a senior Mumbai-based real estate analyst, who wished to remain anonymous, told this paper.

At number of real estate firms have plans for IPOs in the Indian capital market, with $6bn to be raised by at least 16 firms, including Emaar MGF, that have announced their plans.

The analyst quoted earlier further explained that Sebi could be concerned about the Indian investors' IPO appetite, especially at a time when many government companies too are in a process of raising funds from the market.

The minimum time required for the approval procedure is one month, but Sebi normally takes longer when the amount to be raised is huge, which is the case with several real estate firms including Emaar MGF.

Said another senior analyst with DTZ, an international real estate consultancy: "It was earlier believed that Emaar MGF's IPO was deferred – now the company seems to be going ahead with it. Though the company may not get valuations as they may have to dilute more stake to raise same amount."

Emaar MGF is one of the top realty firms in India and is involved in the construction of Commonwealth Games Village – a prestigious project in India.


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