Meraas plans to launch initial public offering

Dubai Parks and Resorts, set up by Dubai government-owned developer Meraas Holding, said it would apply to list its ordinary shares on the Dubai Financial Market.

Dubai: Dubai Parks and Resorts, a subsidiary of Meraas Holding, announced on Tuesday that it would launch an initial public offering, or IPO, to raise Dh2.53 billion as it embarks on building a Dh10.5 billion theme park in line with Dubai’s plan to attract 20 million tourists a year by 2020.

The IPO announcement came as Goldman Sachs Group arranged a Dh4.2 billion loan for Dubai Parks and Resorts to fund the development of the theme park.

Dubai Parks and Resorts, set up by Dubai government-owned developer Meraas Holding, said it would apply to list its ordinary shares on the Dubai Financial Market.

The company said on Tuesday that it would offer 40 per cent of its shares to the public in the IPO at a price of Dh1 per share in an offer that will be open from November 17- 30.

The company also revealed that five per cent of the offer would be reserved for the government’s Emirates Investment Authority. Institutional investors will get up to 60 per cent of the shares.

The Dubai Parks IPO marks a revival of equity offers in the UAE.

On the back of an upbeat investor sentiment, there has been a rebound in IPO activity in the UAE this year with the heavily oversubscribed issuances by Marka (Dh275 million), Emaar Mall Group (Dh5.8 billion) and Amanat (Dh1.37 billion). Amanat, a healthcare and education start-up run by Dubai-based private equity group Ithmar Capital, is the latest of the three and raised more than Dh13.6 billion from investors, and joined Emaar Malls Group as the UAE’s second heavily-oversubscribed listing this year.

In fact, there have been more IPOs in the first nine months of 2014 compared to a year earlier as amount raised has surged by 53 per cent, to $3.5 billion.

More IPOs are in the pipeline, including the one by Al Habtoor early next year.

“We are delighted to announce the launch of the Dubai Parks and Resorts IPO, and to give investors the opportunity to become shareholders in one of the region’s most exciting development projects,” said Raed Al Nuaimi, chief executive officer of Dubai Parks and Resorts.

“This is an exciting day both for Dubai Parks and Resorts and for Meraas Holding,” said Abdulla Al Habbai, chairman of Meraas Holding.

“The listing of Dubai Parks and Resorts on the DFM will mark an important milestone in the development of the project and brings us one step closer to our vision of becoming a premier year-round global entertainment destination. Against a background of strong macroeconomic fundamentals and favourable demographic trends, we see Dubai Parks and Resorts as well positioned to meet increasing visitor demand, both locally and regionally, and should be able to capitalise on the projected growth in tourists to Dubai and the Middle East.” The money raised will be used to build a multi-themed leisure and entertainment destination complete with a shopping, dining and resort infrastructure.

Along with Goldman Sachs, Abu Dhabi Commercial Bank, Commercial Bank International, Emirates NBD and Noor Bank are underwriting the Dh4.2 billion loan deal. Syndication will begin once the company has completed the IPO. Goldman Sachs is also advising on that sale.

Meraas estimates the theme park project cost of about Dh10.5 billion can be funded through Dh4.2 billion of debt and Dh6.3 billion of equity. The equity will include the IPO proceeds, plus Dh2 billion in cash and Dh1.78 billion in land and previous expenses funded by Meraas. The theme park is being planned as part of the Dubai’s plan to attract 20 million tourists a year by 2020. The project will include the Middle East’s first Legoland theme park, and two other parks based on Bollywood and Hollywood films. Meraas has guaranteed to fund any cost overruns through interest-free shareholder loans. The company expects the theme park to open by the third quarter of 2016 and to attract 6.7 million visitors the following year. Dubai’s benchmark share index is among the best performing globally after rising 36 per cent this year, prompting share sales by companies such as Emaar Properties, which offered stock in a malls unit that operates one of the largest shopping centers in the world.

issacjohn@khaleejtimes.com