Dubai's Emaar to Launch Malls Business IPO in September

A general view of the Dubai Mall area in Dubai on March 15, 2014. Reuters

DUBAI—Emaar Properties, Dubai's flagship real-estate developer, said it plans to launch the initial public offering of its profitable malls business in September, which would likely be the largest share sale in the United Arab Emirates since it was hit by the financial crisis in 2008.

The IPO underscores Dubai's rapid rebound from the global financial meltdown that saw local equity and real-estate markets collapse, forcing several of the emirate's main holding companies into painful, multibillion-dollar restructurings. Analysts say a successful IPO of Emaar Malls Group could reignite listing activity on the country's main exchanges, which already received a shot in the arm earlier this year after being upgraded to emerging-market status by index compiler MSCI Inc. MSCI +0.59%

Floating EMG also reflects Dubai's improving economic prospects due to a steady increase in trade and tourism numbers. In the first six months of this year, Dubai's hotelswelcomed 5.8 million guests, a record for the period. The emirate has continued to pour billions into upgrading its airport, public transport and hotels, investments that are geared toward attracting more visitors from across the region and beyond.

"For Dubai to have an IPO of this size is a real test of the recovery that we've talked about for the past three years," said Mohammed Ali Yasin, managing director of NBAD Securities. "The climate is very positive for a successful IPO and if it succeeds you will see others encouraged to follow."Emaar Properties on Sunday said the IPO of its malls business, which was announced earlier this year, is open to both individual and institutional investors but limited to 30% and 70% respectively of the offering. Emaar expects to sell at least 15% of EMG as part of the offering and it aims to return about $1.44 billion of the proceeds to shareholders in the form of a dividend.

Dubai's government owns 29.2% of Emaar Properties, the developer which helped build the tallest tower in the world, the Burj Khalifa, and the surrounding downtown area.EMG's main source of revenue stems from Dubai Mall, one of the largest shopping centers in the world. Dubai Mall has an aquarium and ice-skating rink, and with 75 million visitors in 2013 is one of the emirate's most popular tourist attractions. The mall accounted for half of the sales of luxury goods by value in the emirate in 2013. Its revenues grew 13% to 1.25 billion dirhams ($341 million) in the first half from a earlier."The IPO of EMG is a milestone for the development of the U.A.E. capital markets as, for the first time, it combines institutional and retail shareholders in the same offering on the DFM [Dubai Financial Market]," said Emaar Properties Chairman Mohamed Alabbar. Emaar hopes to list the unit in October, according to a spokesperson.Emaar Properties is currently the largest listed stock on the Dubai Financial Market with a market value of around $22 billion. The DFM's total value is close to $94 billion, according to data from Zawya.com. Emaar estimates the fair market value of its malls business is $10.6 billion.Emaar Properties had initially suggested it wanted to list the malls group in London as some other regional companies have done in recent years to tap more overseas investors and diversify internationally. Companies are usually required to list at least 55% of their shares to list on the DFM but Emaar has received exemption on that rule