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Emaar granted exceptions to IPO rules on the Dubai Financial Market, sources say

Emaar Properties, Dubai’s leading developer, has been given approval to float shares in its malls business on the Dubai Financial Market, and exemption from restrictions that would normally apply to local-market initial public offerings.

Two senior sources in the Dubai financial hierarchy said the UAE regulator, the Securities and Commodities Authority, had given Emaar approval for an IPO on the DFM, easing rules on how much of its capital could be sold, how the price was set and what the proceeds could be used for.


The move means that Emaar is likely to abandon plans for simultaneous listings on the emirate’s international market, Nasdaq Dubai, and the London Stock Exchange announced by the board under the chairman, Mohamed Alabbar, in March.


Instead, it will prepare for an IPO of up to Dh9 billion on the local market, which could be achieved in the time frame set by Mr Alabbar – before Ramadan begins at the end of June. It would be the largest IPO in the DFM’s history.


A spokesman for Emaar declined to comment on the development.


According to officials and advisers to Emaar, the company will be allowed to reduce the amount of equity it has to sell from 55 per cent to about 25 per cent, it will be able to use book-building to determine the price rather than to issue shares at par value and shareholders will be allowed to realise cash in the IPO rather than put all proceeds back in the company.


“It’s a big shift in thinking. It shows the regulator is aware of the competitive position of Dubai, compared with international markets,” one of the sources said.


Investment Corporation of Dubai, with a 30 per cent stake in Emaar, will be a big beneficiary of the IPO.


The change of heart will be a blow to the big investment bank advisers lined up by Emaar for a London listing. It will also be watched at Nasdaq Dubai, which already has similar rules to the new SCA-endorsed exemption.


“Emaar always wanted to do the malls IPO in Dubai. It is a quintessentially Dubai company. But the rules meant that Mr Alabbar would lose control of the process, so he went instead for Nasdaq Dubai and London. The SCA has acted responsibly in the face of that competition,” the source said.


Some lawyers believe Emaar’s exemption could pave the way for other such exceptions, while UAE corporates wait for the rules to be changed permanently with new commercial law and investment legislation that is going through final drafting.


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