Damac IPO: Dubai property developer raises $348m in share sale

on Dec 3, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Tuesday, December 3: Dubai’s Damac has today raised about $348 million (£212.4 million) from an initial public offering (IPO) of global depositary receipts (GDRs) in London that values the luxury real estate developer at about $2.65 billion (£1.62 billion).

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Damac had initially planned to raise $500 million (£305.2 million) from the IPO with an indicative price range of $12.25 to $17.25 per GDR, encouraged by signs of recovery in Dubai’s real estate market. The share sale, the first by a Dubai property firm since the crash of the emirate’s real estate market in 2008, is testing the appetite of global investors for the emirate’s recovering property market. Residential property prices in Dubai, which more than halved during the market crash, have rebounded recently, supported by growth in Dubai’s trade and tourism sectors.

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The size of the deal was reduced to $400 million last week and the final price was set at $12.25 per GDR, the bottom of the price range. A GDR is a certificate that represents a block of shares in a company. GDRs are often issued by firms in emerging market states to allow foreign investors to buy the stock more easily. Each GDR offered in the Damac IPO represents three ordinary shares of the property group. The GDRs are due to start trading on December 6.

According to Sanyalaksna Manibhandu, a senior analyst at Abu Dhabi-based NBAD Securities, the decision to price the GDRs at the low end of the range indicated that “the interest wasn’t as good as expected and initial trading may show volatility.” Damac may seek a dual listing in the United Arab Emirates at some point because shares in London-listed companies that don’t do business in Europe don’t tend to perform well in the long term, Manibhandu opined.

Deutsche Bank and Citigroup are joint bookrunners for the IPO. The investment banking arm of Saudi Arabia’s Samba Financial Group and VTB Capital are acting as co-lead managers.

Damac has started projects including Hollywood-themed apartment towers and a Trump International golf course this year. The property group has assets valued at $2.3 billion. Last month, it reported a profit of $332 million for the first half of 2013, up from $212.1 million for the whole of 2012. Gross profit margins averaged 44 percent in the three years through 2012 and 64 percent in the first half of this year.
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Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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