Emaar Malls shares surge in first trading

Shares of the retail division of Dubai's Emaar Properties surged in first trading on Thursday after an initial public offering that highlighted a return of investor confidence in the Gulf market.

The IPO of Emaar Malls Group -- which owns one the world's largest shopping centres, the Dubai Mall -- was aimed at raising $1.58 billion (1.25 billion euros) but was 30 times oversubscribed.

It was the largest IPO in the UAE since the global financial crisis hit the country in 2009, causing a drought in flotations.

Sold ahead of flotation on the Dubai exchange at the top offered price of Dh2.9 ($0.79), Emaar Malls Group shares jumped 20 per cent to around Dh3.5 on opening, reflecting a huge pre-trading demand.

It ended the first day of trading slightly lower at 3.25 dirhams, 12.07 per cent up from original price.

The pricing gave the group a market capitalisation of approximately Dh37.7 billion ($10.3 billion), it said in a statement posted at the Dubai Financial Market website.

The group offered the shares for sale over two weeks starting September 14.

Emaar Malls' order book was oversubscribed more than 30 times for the institutional tranche of investors and more than 20 times for the individual tranche.

The final allocation was around 70 per cent for institutional investors, with the remainder allocated to individuals, the group said.

"Institutional investments represent a testimony. Those make calculated decisions based on studies, and are not emotional," said financial analyst Ziad Dabbas, arguing that Emaar's decision to allocate 70 per cent to institutions was a "smart move."

"Those have the financial liquidity, and they do not follow rumours in their action," he said.

Emaar Malls Chairman Mohamed Alabbar, who led the bell-ringing ceremony kicking off trading, said: "The response from investors to the offering has surpassed our greatest expectations."

Emaar Properties, the parent group of EM, is the largest listed company on the Dubai Financial Market. It was behind several landmark property developments including the world's tallest tower, Burj Khalifa.

Dubai Mall's footfall reached 74.8 million visitors last year, and hit 40 million visitors in the first six months of this year.

"The market needs opportunities. Successful government companies and large family businesses should partially open up through public offers," said Dabbas.      

Dubai's economy has made a strong comeback since the global financial crisis, thanks to growth in trade, transport and tourism.

 

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