Monday, November 4, 2013

Damac Tests Appetite for Dubai Property With U.K. IPO Plan...
Damac Properties Development Co., a Dubai-based housing developer, plans to raise as much as $500 million in a U.K. initial public offering that will test appetite for the emirate’s recovering property market.

Al Firdous Holding and Sahira Co., controlled by Damac founder and chairman Hussain Sajwani, will offer global depositary receipts in a new company called Damac Real Estate Development Ltd. in the IPO. Each GDR will be worth three ordinary shares of the company.

Damac has started projects including Hollywood-themed apartment towers and a Trump International golf course this year as Dubai’s property market recovers from a 2008 real estate crash that brought the sheikhdom to the brink of bankruptcy. The pace of the revival has prompted regulators to take steps to guard against a repeat of the bubble.

“There will definitely be appetite because Damac is a proxy to Dubai’s real estate, which is recovering at the moment,” Taher Safieddine, an analyst at Shuaa Capital PSC. “They have witnessed the boom and bust and managed to come out of the crisis relatively in a good shape.”

Damac has assets valued at $2.3 billion and it made a first-half profit of $332 million, up from $212.1 million in all of 2012, according to the filing. Gross profit margins averaged 44 percent in the three years through 2012 and 64 percent in the first half of this year, the filing said.

Dubai Focus

“Our biggest operations will continue to be in Dubai,” Sajwani said in an interview today. “The Middle East as a territory, especially Saudi Arabia where we have already developments and operations, will continue to grow for us.”

While Damac tends to be focused on building and selling homes, investors will compare the company’s valuation to Emaar Properties PJSC, Shuaa’s Safieddine said. Emaar, Dubai’s biggest publicly traded developer, generates much of its income from leasing malls and operating hotels, providing a cushion in downturns, he said. Emaar’s shares surged 63 percent this year.

Citigroup Inc. and Deutsche Bank AG along with Samba Capital and Investment Management Co. and VTB Capital Plc are managing the IPO, according to the statement.

Sajwani will remain Damac’s chairman and chief operating officer, according to the filing. Dubai’s decision to increase property-sale fees to 4 percent will have little effect on sales because the rate is still below countries in Europe and Asia, Sajwani said.

Damac, which partnered with Italian fashion house Fendi SpA and Paramount Pictures Corp. is expanding outside its home market with towers in cities across the region including Abu Dhabi, Riyadh, Jeddah, Beirut, Amman and Baghdad.

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