‘Stock swings’ slow UAE IPOs as Emaar targets H2

Flags of Emaar Properties, builder of the world’s tallest skyscraper, fly near high-rise properties in the Marina district of Dubai. Emaar, Dubai’s largest publicly traded real estate developer, is planning to sell shares in its hotels unit in the second half, three people with knowledge of the matter said.Bloomberg/DubaiThe biggest stock-market swings in the UAE since 2008 may be poised to delay initial public offerings from the Arab world’s second-largest economy.Emaar Properties, Dubai’s largest publicly traded real estate developer, is planning to sell shares in its hotels unit in the second half, three people with knowledge of the matter said. Emaar’s chairman had earlier said the offering may take place in the first half. Dubai is the world’s most volatile market, and the UAE’s market regulator has advised “many” companies to delay IPOs, Securities & Commodities Authority chief executive officer Abdullah Al Turaifi said last week.Oil’s plunge to the lowest price in more than five and a half years sparked a selloff across Gulf Co-operation Council equity markets, with at least six regional indexes entering bear markets in the last five weeks of 2014. Three of the most recent IPOs in the UAE are among the GCC’s worst performing initial offerings in a decade.“IPOs need a certain stability in the secondary markets,” Rami Sidani, the head of frontier markets investing at Schroders Investment Management Ltd, said by phone from Dubai. “Periods of high uncertainty might hamper investors’ appetite for new issuances and negatively affect the availability of liquidity.”Emaar chairman Mohamed Alabbar said the company may sell shares in its hotels unit during the first half of 2015 in an interview with Sky News Arabia that aired on October 2.Emaar Malls Group shares jumped as much as 21% in their first day trading in October. Since its debut the mall unit slumped 5.5% through Wednesday, and its performance was in the lowest quartile of more than 150 GCC public offerings since 2005, according to data compiled by Bloomberg.“The hotel business is one of Emaar’s most prized assets,” Taher Safieddine, an analyst at Shuaa Capital in Dubai, said by phone. “They will definitely wait until at least market volatility subsides and investor confidence is stronger because when sentiment is negative, investors don’t differentiate between good and bad assets.”The 30-day historical volatility on Dubai’s DFM General Index was 73 on Wednesday, near the highest since November 2008 and the most among more than 70 gauges globally. Greece was second with volatility of 61. The 30-day historical volatility on Abu Dhabi’s ADX General Index was 44, near the highest since January 2010.“Emaar may need to have lower valuation ambitions for Emaar hotels than they did for Emaar Malls,” Mohammed Ali Yasin, managing director of NBAD Securities in Abu Dhabi, said by phone. At 2.9 dirhams ($0.79) a share, Emaar Malls’ valuation was close to 30 times estimated 12-month earnings, he said. To succeed, Emaar Hotels would need to look for a valuation that’s around 15 to 20 times, he said.Any delayed sales will be a blow to investors in the Dubai Financial Market, who endured a five-year drought of offerings before Marka’s shares listed in September. The DFM General Index, the emirate’s benchmark equity gauge, was the world’s best for the first five months of the year, before sinking more than 20% in June amid speculation that construction company Arabtec Holding Co was losing government backing.Amanat Holdings, a Dubai-based healthcare start-up, lost 20% since its November listing through Wednesday and Dubai Parks & Resorts, a theme park operator, dropped 31% since its first trading day on December 10.