Al Habtoor revives plans for initial public offering valued at $2.5 billion

Al Habtoor Group, the Dubai conglomerate, is reviving plans for a multibillion dollar initial public offering (IPO) and could be ready to come to market early next year.

With a possible value of about US$2.5 billion, the IPO would be the biggest since 2007, although the valuation process is still at an early stage.

The hotels, property and car-dealing conglomerate pulled out of a planned IPO in late 2102, but it is believed the buoyant economic and market conditions in Dubai have persuaded Khalaf Al Habtoor, the founder and chairman of the group, to think again.

An IPO would also be a means of smoothing the succession process at the business, where members of Mr Al Habtoor’s family are employed in senior executive positions. It would be the first of the big merchant families of the UAE to opt for listed public company status.

In response to a query from The National, a spokeswoman for Mr Al Habtoor explained he was travelling and unable to talk about a potential IPO.

“We at the Al Habtoor Group are always reviewing our options and the way forward. We’ve been studying an IPO for some years now, and nothing has changed in that matter. We have no further comment on this,” she added.

However, one source familiar with the situation, who requested anonymity because the matter was still private and final details were being worked on said: “Al Habtoor is encouraged by the new climate, and the flexibility the market authorities are showing in the listing regulations.”

He suggested Al Habtoor was considering a listing of 30 per cent of equity on the Dubai Financial Market, with half of that being used to raise new money.

A second source, who also declined to be named, said Al Habtoor had received “tentative” approval from the Securities and Commodities Authority, the federal regulator, for the new share structure.

The SCA has allowed some companies – notably in the imminent listing of Emaar Malls – to sell less than the previous minimum of 55 per cent on the DFM.

Nearly two years ago, Mr Al Habtoor said the group was considering multiple IPOs on markets in the UAE, Saudi Arabia and possibly London, but he pulled out of that plan citing “moral issues”. He explained that he did not want to raise money for which he had no obvious need or use.

Now, however, it appears sentiment and financial conditions at the company have changed.

Hisham Farouk, managing partner of Grant Thornton, the accounting and consulting firm that has been Al Habtoor’s long-term adviser, said: “I cannot comment on Al Habtoor specifically because of client confidentiality. But a number of family businesses are becoming more interested in reconsidering IPOs.

“Given the improved economic conditions, the liquidity in the markets and the greater flexibility of the regulators, going public is an option for them again. It would also help ensure succession issues are resolved.”

Grant Thornton valued Al Habtoor at $6.06bn in the IPO discussions in 2012, excluding certain foreign assets, a figure Mr Al Habtoor appeared to think was too low. “Perhaps they [Grant Thornton] don’t see it the same way as me. Perhaps I’m in love with certain properties, they are my trophy assets,” he said at the time.

Since then, asset prices in Dubai property have risen sharply, and Al Habtoor has made progress on a $1.6bn investment programme in its business in the emirate.

According to one source, Al Habtoor could now be valued at around $8bn, implying an IPO value of $2.7bn, making it the biggest public flotation since DP World in December 2007.

The site of the old Metropolitan hotel owned by Al Habtoor is being rebuilt as a new hospitality and entertainment complex, with three hotels and a “Las Vegas style” theatre, as well as residential property along the planned Dubai canal.

Al Habtoor was also reported to be among a consortium of Middle East businessmen aiming to invest in luxury hotel assets in London and other European cities, although this has not been confirmed.

Two banks – Emirates NBD and National Bank of Abu Dhabi – were said to be involved in discussions as advisers to the possible IPO. Neither would comment.

fkane@thenational.ae

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