First listing of Emaar Development falls short of offer price

22/11/2017 14:17 AST

The initial listing price of Emaar Development, the property development business of the biggest United Arab Emirates (UAE) real estate company Emaar Properties, fell sharply at the start of its first listing day on Wednesday.

It traded initially at 5.73 dirham (1.56 dollar) per share at the Dubai stock exchange DFM, well below the offer price of 6.03 dirham (1.64 dollar) per share.

Emaar Development's month company Emaar Properties is the developer of the world's tallest building, the 829 meters tall Burj Khalifa, located in Dubai Business Bay.

Taking into account the offer price of 6.03 dirham (1.64 dollar) per share, Emaar Development was valued at 24.1 billion dirham (6.56 billion dollars) market capitalization, marking the first major initial public offering (IPO) since Emaar listed in October 2014 its shopping center division Emaar Malls on the DFM.

Emaar Chairman Mohamed Alabbar, who is also chairman of Emaar Development, rang the opening bell at the DFM but he was not available for media interviews. Instead, Alabbar submitted a statement filed on the website of the DFM, saying that the IPO was "successful" and that regional and international investors are "excited" by Emaar Development's "proven business model."

Emaar Properties received shareholder approval to float 30 percent of Emaar Development, but preferred to float only 20 percent of the firm on the market.

Emaar Development had a backlog of 41 billion dirham (11.17 billion dollars) and delivered 34,500 residential units since 2002, added Alabbar.

Earlier in the week, Emaar denied media reports which wrote about rumors that the anti-"corruption" clampdown on corruption in Saudi Arabia allegedly led to a regional liquidity crunch in relation to the IPO.

Scores of Saudi princes and top executives have been detained by the Saudi government since earlier this month, initiated by Crown Prince Mohamed Bin Salman, sad they have been accused of "corruption."

Among the detained who are not allowed to leave the Ritz-Carlton Hotel in Riyadh is Saudi investment tycoon and billionaire Prince Alwaleed Bin Talal.

Through his Kingdom Holding, he holds shares in social media channel twitter, Citigroup and many other globally operating firms.

"Despite recent events in Saudi Arabia, the company still received strong interest from regional investors," said Emaar in a filing to the DFM on Monday.

When asked earlier in the month, if he considered the current market environment favorable, Alabbar said "of course, otherwise we would not go ahead with the IPO. Emaar Development is part of our long-term strategy."

Xinhua