Dubai Initial Public Offering Market Returning to Life with Shopping Mall Share Sale

Five years after facing financial disaster, Dubai shows indications that their Initial Public Offering (IPO) within the Emirates, is returning to financial stability as the owner of the largest shopping mall in the world is planning on selling shares to the public.

Dubai’s most established real estate company, Emaar Properties intends to also list at least 15% of its profitable and popular mall businesses. This percentage has been valued to approximately $10.6 billion by the real-estate-services company JLL. This is estimated to amount to the largest share sale since 2007.

Expert financial managers and analysts comment that if Emaar Malls IPO is a success, other local companies will also IPO their shares. Amongst the potential candidates are two privately owned equity groups, named Gulf Capital and Ithmar Capital as well as two state-owned real-estate companies, named Nakheel and Merass Holding.

In the beginning of this year, Emirates REIT and Marks companies also initiated IPOs in the stock market. The launch of the IPOs attracted the interest of investors.

The readiness of these organizations to open up to the world mirrors Dubai's economic growth and accentuates the 54% increase in the stock exchange’s performance since the beginning of the year.

International organisations and companies have shown interest in Dubai since the MSCI has upgraded the UAE to one of the most prosperous and thriving emerging markets of the world. As stated by Declan Hayes, a managing director at Deloitte Corporate Finance, clients are considering going public due to the revival of the IPO in the UAE bit also because the MSCI upgraded the UAE and it is now viewed as an emerging market since May.

The revived IPO interest conflicts with the trouble Dubai faced only a few years ago, when of the emirate government-owned holdings faced intricate restructuring due to all the debts they acquired in previous years to invest in expansion projects and plans both locally and abroad.

After 2009, IPO activity declined tremendously, and apart from a few companies that has the power to overcome the difficulties such as Abu Dhabi's Gulf Marine Services, Damac and two hospital groups, all the remainder chose to invest in the London Stock Market.

It is now evident that the Persian Gulf economies have since then revived and are now considering going public again. According to Ernst & Young, during the first half of this year, the value of the majority of IPOs located in the Gulf area have triples to just over $2 billion in contrast to the exact same period in 2013.

Ghadir Abu Leil-Cooper, Baring Asset Management's head of EMEA Equities stated that the increased interest in IPOs comes as no surprise when taking into account that Dubai has succeeded in developing into a financial-services centre in the region.

The only possible downside for issuers who are considering going public in Dubai is th\t the main exchange entails that companies sell at least a minimum of 55% of the company.

Nonetheless, the regulator made an exemption with Emaar’s case, which is said is selling only 15% of its mall’s business. Some view this exemption indicates that Dubai is willing to cater better deals so as to cater to potential issuers’ needs and wants.

The developer company Damac, which was listed in the London Exchange Market last year, recently announced it would propose and offer its holders of global depository receipts the opportunity to convert the latter into ordinary shares, which will be listed in Dubai Financial Market. This move clearly indicates that Dubai’s IPO is reviving rapidly.