London IPO Of Dubai’s DAMAC 75% Covered

The $500 million London initial public offer of shares by Dubai-based DAMAC Real Estate is 75 per cent covered, and the deal is set to price on Tuesday, according to a lead.

The property firm opened roadshows on the IPO on Thursday, November 14, setting a price range of $12.25-17.25 per Global Depositary Receipt.

Proceeds are fixed at $500 million, so the freefloat will range between 15 and 21.7 per cent depending on the final price. This values the company at between $2.65 billion and $3.74 billion.

Hussain Sajwani, the full owner of the firm, will sell up to 18.8 per cent of the share capital and provide a secondary greenshoe.

A major selling point in the deal is the yield on offer. The pricing range implies a yield based on the 2014 dividend of 9.5 per cent at the top, rising to 13.5 per cent if the deal is priced at the bottom.

The deal is scheduled to price on Tuesday so that trading can begin on Wednesday, ahead of the Thanksgiving holiday in the United States.

The company’s decision to launch an IPO is an indication of just how far sentiment has changed on Dubai property since the real estate crash of a few years ago.

“Rental prices have continued to grow, so the underlying (property) prices have also grown over the last seven quarters. The decision to launch was grounded in the fundamentals, and the expectation that growth will continue,” DAMAC chief financial officer Adil Taqi told IFR when the IPO was first announced.

If successful, the deal will provide encouragement to other Gulf property firms to turn to capital markets. In fact, Abu Dhabi-based Aldar Properties is currently in the market for an Islamic bond.

Citigroup and Deutsche Bank are joint global co-ordinators and bookrunners on DAMAC. Samba Capital and VTB Capital are co-lead managers.