Investors nervous ahead of Dubai Parks’ listing on DFM

09/12/2014 19:30 AST

Investors were nervous ahead of listing on Dubai Parks and Resorts on the Dubai Financial Market (DFM) amid continued sell-off due to sliding crude oil prices.

The DFM General Index fell as much as 6.7 per cent at 3,760.90, the level last seen in early February, leading the losses in the GCC region.

“The nevourness seen in the wider market at the moment is of concern and may have a knock effect on the listing,” said Saleem Khokhar, head of equities at NBAD’s asset management group.

Weakness in crude oil post the OPEC’s decision to maintain output has been weighing on sentiment of investors equity markets. The Saudi’s Tadawul and the DFM have both entered the bear market teritorry.

Sovereign wealth funds like Kuwait Investment Authority and the Qatar Investment Authority were among the institutional investors that subscribed to the IPO, whose wholesale portion was oversubscribed 65 times. The retail tranche was subscribed 10 times.

But analysts feel that the company’s strong fundamentals would help it through.

“The company’s fundamentals are solid and falling oil prices won’t have an impact. and weakness could be considered as an opportunity to accumulate positions,” said Khokhar. Dubai Parks & Resorts is building three theme parks — Motiongate Dubai, Bollywood Parks Dubai and Legoland Dubai — and a 500-room hotel on a stretch of desert halfway between Dubai and Abu Dhabi. The three theme parks will open by October 2016 and are expected to attract 6.7 million visitors the following year.

Arqaam Capital, which initiated coverage on the company, expects a potential upside of 49 per cent.

DPR is an emerging play on the real estate and tourism industry in Dubai, currently developing 3 multi-themed parks in Dubai, to be completed by October 2016.

In a favourable touristic environment, Dubai Parks is set for 12 per cent five-year revenue compounded annual growth rate.

On track:

The company is on track to complete the project by October 2016, and about 35 per cent of the infrastructure works is already complete.

“From the project perspective schedule we are very well on schedule. We are on track for the opening of October 2016. We hired the best time in the world from the theme park industry and Dubai local knowledge industry, so we get the best outcome,” Raed Al Nuaimi, chief executive officer of Dubai Parks and Resorts told Gulf News in an exclusive interview last month.

“I consider it as a national product because it’s an industry that we are creating for Dubai and the region, and we would like the UAE nationals and people who live in this country are proud of the national product,” he said.

Gulf News