Emaar’s Egypt Unit IPO seen as sign of Egyptian Resurgence
The announcement this week by Emaar Misr, a wholly-owned subsidiary of UAE leading developer Emaar, that it planned to float a 13 per cent stake on the Egyptian stock exchange (EGX) is being seen as a sign of recovering interest in the local bourse.
Egyptian equities have been crippled by the political turmoil and economic uncertainty that followed the 2011 revolution, but since last year there have been several initial public offerings that investors hope will signal the beginnings of a turnround.
The market was the best performing in the world in 2014, but daily volumes were still well below their pre-2011 levels.
The bourse received another fillip this week when the government promised to delay the imposition of a new 10 per cent capital gains tax for two years.
Emaar said on Wednesday it was making a public offering to retail investors in Egypt, and a private placement to institutional investors in a number of countries including Egypt.
Emaar said it planned to use the net proceeds raised from the offering, together with its existing cash resources, principally to further the development of non-residential areas of its projects under development in Egypt. These include retail and office space and an international yacht marina and hotels in Marassi, a Mediterranean resort.
The company, which has been building upmarket housing and holiday compounds for the wealthy, has a 15.4m square metre land bank distributed in east, west and central Cairo and on the Mediterranean coast.
Emaar’s Egyptian float marks the maturing of the real estate group’s overseas portfolio, where the company has failed to grow as fast as it has done at home in Dubai.
The company has diversified from home delivery into retail and hospitality, floating its Emaar Malls unit in Dubai last year.
Like other Dubai-based companies, Emaar is eyeing expansion in Egypt after years of turmoil constrained economic growth.
UAE companies say they are investing to generate profit, but inward investment into the country under the leadership of close UAE ally Abdel Fatah al-Sisi is also a foreign policy priority.
Mohammed Alabbar, the Emaar chairman, is also involved with Abu Dhabi-financed developers seeking to build a new capital city to the east of Cairo.
Ahmed Salem, head of brokerage at Beltone, a Cairo-based regional investment bank said Egypt needed more issuances.
“What is important is for the market to become more diversified and for market cap to grow,” he said.
Noting that several large listed companies left the Egyptian market before and right after the revolution, Angus Blair, head of the Signet Institute, an economic think-tank, said the IPO reflected “increased confidence” but was still small.
“Foreign investors in particular like large . . . stocks and we don’t have many of them at the moment,” he said. “It would be wonderful for instance if Vodafone Egypt came to the market again.”
Source: The Financial Times
