A Dubai company plans to launch a $689mn initial public offer of shares this month as it builds a $2.9bn amusement park complex which is key to the emirate’s drive to expand as an international tourist destination.
Dubai Parks & Resorts, part of the government-owned Meraas investment group, said yesterday it would sell 2.53bn shares or 40% of its outstanding shares between November 17 and November 30, at a price of 1 dirham each.
The company has started work on three linked theme parks that it says will help Dubai meet its target to double annual tourist numbers to 20mn in 2020 from 10mn in 2012, and treble tourism income over that period.
The 16mn sq ft (1.5mn sq m) project on the outskirts of Dubai is to feature three theme parks: Motiongate, based on films made by DreamWorks Animation and Sony Pictures; LEGOLAND Dubai, and Bollywood Parks.
Hotel, shopping and other entertainment facilities are also planned, with completion scheduled by September 30, 2016.
Meraas estimates the project will cost a total of about 10.5bn dirhams, funded through 4.2bn dirhams of debt arranged by Goldman Sachs, and 6.3bn dirhams of equity. The equity will include the IPO proceeds, plus 2bn dirhams in cash and 1.78bn dirhams in land and previous expenses funded by Meraas.
The Dubai Parks IPO marks a revival of equity offers in the UAE; they dried up as the global financial crisis erupted five years ago, but are now being buoyed by a strong rebound in the UAE economy and markets. Several offers have occurred this year and drawn heavy investor demand, including the $1.6bn IPO of Emaar Malls Group.
Emirates Financial Services, Goldman Sachs and HSBC are acting as joint global coordinators for the Dubai Parks IPO, with EFG Hermes and Shuaa Capital also involved.
Ten percent of the offer will be allocated to retail investors, 25% to wealthy individuals wishing to buy a minimum of 5mn shares each, and 60% to institutions ordering at least 10mn shares. The remaining 5% is reserved for the UAE government’s Emirates Investment Authority.