Dubai real-estate conglomerate Emaar Properties is set to launch its initial public offering of its profitable malls business this month, a positive move for existing investors as a spinning off and separate listing will most likely raise the value of the Emaar Malls Group, said an expert.

If the listing is a success, it could be the start of other Emaar operations also listing separately to maximise their valuations, said Sachin Mohindra.

At present, Emaar's group structure consists of eight operations including Emaar Malls Group, Emaar Hospitality Group, Emaar Hotels & Resorts and Emaar International.

In equity markets the valuation of a conglomerate is typically lower than the sum of part valuations of the individual businesses as investors apply a conglomerate discount. This is usually done given the large number of moving parts in a conglomerate which makes the valuation exercise quite complicated.

So typically if parts of the conglomerate are separated - such as Emaar Malls Group, Emaar Hospitality Group and Emaar Properties - it should usually result in a better value for each operation.

Emaar Hospitality Group is also profitable and we could see this being spun off in the future – which could result in better value for shareholders.

Other Emaar Group IPO’s could include a separate listing of each of its international operations in the long term.

Invest AD - Abu Dhabi Investment Company has been tracking and analysing Emaar for more than 10 years, and has understood the company, its history and its potential for future refinement and growth.

The company has been an active investor in the stock through a number of funds/managed portfolios. 

The intention is to basically list the malls group in order to provide potential investors with an opportunity to participate in pure-play retail industry driven company. It may be noted that the key assets of Emaar Mall Group are the renowned Dubai Mall, The Marina Mall, The Souk Al Bahar, The Gold & Diamond Park and a number of community centers.

A listing of Emaar Malls Group should see a value-unlocking for Emaar shareholders and new investors will have an opportunity to buy into a pure retail sector story which is what Dubai is now well known for.



Retail accounts for a large portion of Dubai’s GDP and tenant sales at Dubai Mall alone are estimated to have contributed approximately to about four per cent to Dubai’s GDP last year. The Dubai Mall ranked among the largest malls in the world in terms of gross leasable area.



Emaar Properties will continue to retain 85 per cent of Emaar Malls Group so although their shareholding will be decreased by 15 per cent they will be holding a bigger and better-valued piece of the pie, said Mohindra.



Based on end of July data the security ranked among the top holdings in the Invest AD UAE Total Return Fund and the Invest AD SICAV GCC Focus Fund.



The stock performed very well last year and on a year-to-date basis till this year. The stock has delivered for Invest AD, he said, also pointing out that the company will need to look closely at the valuation before taking part in the IPO.

The general expect ion is a floor value of Dh33 billion ($8.9 billion) for the Emaar Mall Group, he added.

International investors are excited about this IPO, with the group, which is currently focused in Dubai, it is in the longer term looking at expanding into the entire GCC retail market which is still under-penetrated.

The initial interest on the 15 per cent IPO is very  encouraging and a number of analysts are expecting that other UAE-based companies will be allowed to conduct an IPO with a float which is lower than the currently mandated 51 per cent. In the case of which, a number of well-managed profitable family-owned business will be inclined to launch an IPO

It is important to note that the Emaar news will not detract focus from Saudi Arabia opening to foreign investors. We are currently in a sweet spot in the GCC, and this Emaar news will attract attention and investors wishing to access Emaar Malls Group will most likely divert funds from a place other than Saudi Arabia.

For Dubai and the UAE, the outlook for the rest of the year is positive as the non-oil side such as trade, tourism and logistics continue to do well. However, the challenge is that as valuations go up, stock selection will assume greater importance.

Careful stock picking based on intensive research will add value. Investors therefore need to pick an experienced investment institution known for its research led investment process to manage their money.



The company has seen interest building up in GCC stocks since the MSCI listing of UAE and Qatar, then with Saudi Arabia opening to foreigners and now with Emaar spinning off its malls group.

A number of large emerging markets focused on international investors were not closely following the region before but now a large number are interested in the region, he added. - TradeArabia News Service

*Sachin Mohindra is a portfolio manager at Invest AD - Abu Dhabi Investment Company and manages Invest AD UAE Total Return Fund, and Invest AD SICAV GCC Focus Fund