Dubai: Property firm Deyaar, which plans the United Arab Emirates’ largest ever initial public offering starting next week, said it aimed to expand in the Middle East and Asia and increase the value of UAE projects five times by 2009.
Projects already under development will enable Dubai-based Deyaar, a unit of Dubai Islamic Bank, to boost profit by about 26% in 2007, Chief Executive Zack Shahin told Reuters.
Deyaar has secured land for residential and commercial projects in the UAE expected to be worth 25 billion dirhams ($6.8 billion) in three years, Shahin said.
The Gulf’s fourth-largest IPO will value the company overall at about 5.89 billion dirhams ($1.6 billion).
The firm, which complies with sharia, or Islamic law, will open a 10-day initial public offering on May 6 to sell 3.178 billion new shares at 1.02 dirhams each, which is equivalent to 55% of its capital.
“Net profit this year should be between 500 and 520 million ... We have not factored the IPO into this,” Shahin said in an interview. The company made 412 million dirhams last year.
“This is (growth) based on signed contracts that are being completed. Investments of IPO proceeds we expect to begin seeing in 2008,” he said.
Deyaar, which has completed 17 residential and commercial projects in the UAE, Turkey and Lebanon, is developing 22 new projects in the UAE, varying in value from 250 million dirhams to 800 million dirhams, Shahin said.
It is also in the final stages of talks with joint venture partners in Saudi Arabia, India, Qatar and Kazakhstan for projects in those countries, at least two of which should be concluded this year, he said.
The Indian project, in which it would hold a minority stake, would involve developing a township, while projects in Qatar and Saudi Arabia would include both residential and commercial components, Shahin said. Deyaar would hold 50% of both projects.
Deyaar is also conducting feasibility studies about entering the Chinese market, he said.
The company, which has a land bank worth 4 billion dirhams, would finance 40% of the value of its new projects with cash and 60% with Islamic bank loans and sales proceeds, Shahin said.
Deyaar, which develops, manages, rents and sells properties and runs a brokerage business, is restricting its IPO to nationals of the UAE and the other Gulf Arab countries to maintain a flexible land acquisition policy, Shahin said.
The company secured three plots of land on Tuesday in Abu Dhabi, an emirate that allows foreign investment under 99-year leases only in restricted areas.
“Most Gulf governments restrict foreign ownership of land. That’s why we can’t entertain foreign investors, it doesn’t fit with our business model,” Shahin said.
Despite restricted ownership, the IPO should attract Gulf Arab investors interested in Islamic investments.
Deyaar operates according to sharia, which bans the charging of interest, equating it with usury, and prohibits investment in businesses that trade in alcohol, pornography or gambling.
“Gulf investors are interested in adding an Islamic asset to their portfolio. We will not go borrow from commercial banks; we will not go and build hotels or operate hotels,” Shahin said.
The shares in the offering will sell for 11.1 times the company’s forecast for 2007 earnings of 0.09 dirhams per share.