[edit] A longer version (168 pages, PDF) available here. Arabic and English. Has details of what Deyaar does and plans to do. Includes 2006 FY financial results and commentary. [/edit]
AED 3.178 billion makes it the largest IPO in the UAE so far (Air Arabia IPO was about AED 2.6 billion).
Total share capital for Deyaar is AED 5.778 billion.
Last year's EPS was about 0.07 dhs so IPO price of 1 dhs per share gives it a trailing PE of about 14-15. If profit grows at the same rate as previous years, these shares could be a good deal. Of course, 2007 profits will be distorted by IPO income.
I guess Shuaa (SHUAA) will produce a pre-IPO coverage report for the Deyaar IPO sooner or later which may have some income and revenue forecasts to do some more analysis with.
Marking a milestone in its aggressive growth, Deyaar, the region's fastest growing real-estate company, today announced that it has secured the approval of the UAE's Ministry of Economy to launch its Initial Public Offering (IPO).
The issue is slated to open on May 6, 2007 and will close on May 16, 2007.
The total size of the offering is AED 3.178 billion allocated over 3.178 billion shares, representing 55% of the company's capital. The shares will be offered at a price of AED1.00 per share in addition to 0.02 fils as offering costs.
Subscription will be open to UAE and GCC nationals. SHUAA Capital is the IPO's Lead Manager and Sole Bookrunner, with Millennium Capital as co-lead manager, and Dubai Islamic Bank as lead receiving bank.
Deyaar's growth has been spectacular with net profits rising from AED 5 million in 2003 to AED 73 million in 2004, AED 141 million in 2005 and AED 412 million in 2006.
Commenting on the company's growth, H.E. Dr. Mohammed Khalfan Bin Kharbash, Chairman of Deyaar and UAE Minister of State of Finance and Industry, said, 'Deyaar's success is powered by its highly professional management and capability to tap into the pulse of the market. The company's commitment to Shariah principles and strong support rendered by its parent, the Dubai Islamic Bank, has played a major role in its progress."
'Deyaar's growth has been phenomenal, outperforming the surging real estate market. The company has witnessed several milestones, evolving as one of the region's most prominent real estate players. Going forward, Deyaar has chalked out a dynamic growth strategy that will place it among the top regional players in the real estate landscape. Deyaar's IPO will not only give investors an opportunity to participate in its success but also benefit from the stupendous growth in key real estate markets.'
Elaborating on the company's strengths, Zack Shahin, Chief Executive Officer, Deyaar, said, 'In a short span of 3 years, Deyaar has earned the confidence of customers, investors and its shareholders. In doing so it has constantly exceeded shareholder expectations and achieved Return on Weighted Capital (ROWC) of 55% in 2006.
'Proceeds from the IPO will be used to finance the company's massive expansion in property development in a series of mega projects in the UAE as well as spearhead its growth in key strategic markets of Saudi Arabia, Qatar, Kazakhstan and India.'
The real estate industry has fuelled economic growth within the region. Deyaar is strategically positioned at the forefront of this major sector through its track record of successful project deliveries and in-depth understanding of the market.
Deyaar, a wholly owned subsidiary of Dubai Islamic Bank, is one of the region's leading real estate players, with over 17 residential and commercial projects across the UAE, Turkey and Lebanon. The company also leads the property management segment with approximately 16,000 units in the UAE.
Makram Kubeisy, Managing Director of the Investment Banking Group at SHUAA Capital, said, 'Deyaar not only enjoys the advantage of being a company with strong fundamentals and a solid track record with proven profitability, but is well positioned to capitalize on the strength of the real estate sector in the UAE in general and in Dubai in particular, and its projected future performance.'
Any IPO can be "undersubscribed". Usually there are institutions that commit to taking up any slack if that happens.
A pattern is difficult to discern at the moment.
Recent IPOs
GULFNAV - low subscription, smallish
DFM - high subscription, largish
Air Arabia - low subscription, large
I don't know about Gulf Navigation but DFM shares looked reasonably good value at 1 dhs each. Air Arabia didn't. Deyaar could be worth looking at further - but subscription only open to GCC and UAE nationals.
SHUAA Capital (SHUAA), released today the terms of the offering for Deyaar's Initial Public Offering (IPO) for AED 3.178 billion offered over 3.178 billion shares.
The UAE regulators have already granted their approval to launch the IPO on May 6.
Subscription to the offering, representing 55% of Deyaar's share capital, will be open to UAE and GCC nationals only. The IPO is slated to close on the 16 May 2007.
SHUAA Capital is the Lead Manager, Financial Advisor, and Sole Bookrunner for the transaction. Millennium Finance Corporation is co-lead manager, with Dubai Islamic Bank acting as the Lead Receiving Bank, and the National Bank of Abu Dhabi as co-lead receiving bank.
Makram Kubeisy, Managing Director - Investment Banking Group SHUAA Capital, said 'Deyaar has a solid business and track record, with an impressive stream of projects in its pipeline, and enjoys the advantage of being lead by an experienced and capable management team.'
Proceeds from the IPO will be used to finance the company's massive expansion in property development in a series of mega projects in the UAE as well as spearhead its growth in key strategic markets of Saudi Arabia, Qatar, Kazakhstan and India.
Karim Schoeib, Senior Vice President - Investment Banking Group SHUAA Capital, said 'Deyaar has exhibited operating efficiency and struck alliances in high-growth markets, the results of which are clearly reflected in Deyaar's solid cash generation capability and the growth in its earnings. The company's net profit rose from AED141 million in 2005 to AED413 million in 2006, a total increase of close to 192%. Deyaar also more than doubled its revenues in 2006 which reached AED1 billion.'
Prospective investors can subscribe through two tranches. The first tranche, for 635.6 million shares, is earmarked for investors who choose to subscribe to a minimum of 10 thousand shares and a maximum of 50 thousand shares. While the second tranche, for close to 2.6 billion shares, is open to those who subscribe to a minimum of 55 thousand shares and above.
Receiving banks and institutions are spread across the UAE and the GCC. In the UAE the receiving banks are: Dubai Islamic Bank; National Bank of Abu Dhabi; Abu Dhabi Commercial Bank; Union National Bank; First Gulf Bank; National Bank of Fujairah; Mashreqbank; Emirates Bank; Dubai Bank; Arab Bank; Finance House; Sharjah Islamic Bank; Dubai Commercial Bank; Commercial Bank International; and Standard Chartered Bank.
Subscribers in the GCC can subscribe through the branches of Standard Chartered Bank in Bahrain, Oman & Qatar.
Refunds and allocations for subscribers in the UAE will commence on May 30, and June 4 for investors who subscribed in the GCC.
as we all knows deyaar is 100% owned by dib
and we(expatriates) can trade dib shares so why this ipo only for gcc nationals
its looks that gov,t has giving a chance to gcc nationals to cover there losses in dfm
but then how we will cover our losses?
or we have to wait uptill sharewadi ipo comes
this will be only for expatriates not for any gcc nationals
yes sharewadi?
its looks that gov,t has giving a chance to gcc nationals to cover there losses in dfm
I can understand how you could view it like this but I doubt it very much. For an IPO of this size to be successful, ie many times oversubscribed, the organisers would want as many people as possible subscribing so restricting it this way doesn't make sense to me. And anyway, who's going to buy the IPO shares when they float?
There are also the costs of leveraging to consider when subscribing for IPOs - which have made the recent IPOs unattractive, I doubt anyone buying in to the DFM IPO made a profit for example.
ok no problem we will make money without any govt help inshallah
tell me your view about tommorow trading day + or _?
and i want to invite mr kamal ceo of arabtec to our live chat to confirm about his press conference,can i?
The last sentence in the following commentary from the GN quotes Zack Shahin, the CEO, explaining why expats cannot own shares of Deyaar...
"We would have loved to keep the issue open to all nationalities. However, we are constrained by local and regional laws that allow only GCC nationals to own land,".
Except it doesn't ... why can expats own shares of Emaar (EMAAR), Union Properties (UPP), Aldar Properties (ALDAR), Sorouh Real Estate (SOROUH) then, but not Deyaar? And pre IPO, expats who had shares in Dubai Islamic Bank (DIB) were owners of Deyaar no?
I think you'll have to do better than that with your explanations Mr Shahin .
Gulf News 29 April 2007:
Demand for Islamic assets 'will drive Deyaar IPO'
Dubai: The huge regional appetite for Islamic assets will drive the demand for Deyaar's Dh3.2 billion initial public offering (IPO), said Zack Shahin, chief executive of Deyaar.
"It's anybody's guess that we would not have taken such a major decision without factoring in all aspects of the market. We count on the huge institutional and retail demand of the GCC investors for high quality real estate-linked Islamic assets. Deyaar IPO fits the bill," Shahin said.
Deyaar, a diversified real estate company that acquires, develops, rents and manages real estate throughout the GCC, will hold its IPO on May 6 and will make over 3.1 billion shares available, according to Shuaa Capital.
Offer details
Subscription to the offering, representing 55 per cent of Deyaar's share capital, will be open to UAE and GCC nationals only. Shares are priced at Dh1 per share, in addition to two fils as offering costs. The IPO is slated to close on May 16.
Given the backdrop of a long drawn market correction across the region and the declining attractiveness of IPOs, analysts and brokers said Deyaar has taken a big chance with the demand and market liquidity.
However, Shahin begs to differ. "We are in the middle of an economic boom driven by oil and construction sectors. I am flattered when someone tells me that investors are liquidating their current portfolios to buy Deyaar shares. After all investors know what they really want," he said.
Factors such as lacklustre performance of the secondary markets across the region and thinning margins on IPO investments due to rising leverage costs and lower premiums have put pressure on IPO demand. The declining investor interest was evident in the performance of Air Arabia's recent public issue which attracted just about 1.5 times oversubscription.
Confident outlook
According to Shahin, an airline IPO cannot be taken as a benchmark for an Islamic real estate offering that has solid fundamentals. However, he did not venture to put a figure on the expected demand. Deyaar reported a growth of 192 per cent in net profits at Dh412 million in 2006. Sales during the year stood at Dh3.2 billion as compared to Dh1.7 billion in the previous year. The company's asset base rose to Dh3 billion from Dh1 billion. Its year-on-year Return on Capital rose to 41 per cent in 2006 from 28 per cent in 2005.
The company intends to use the IPO money for new developments in Saudi Arabia, India, Turkey, Kazakhstan and the UAE. Deyaar has currently about Dh21 billion worth of projects at design stage and a land bank worth over Dh3 billion.
Deyaar expects Dubai's real estate boom to last at least 10 years from now.
"The economy is booming. More and more people want to come here to stay. There is a monthly influx of more than 60,000 people to the UAE to take up new jobs. And even if we take into account 10 per cent of this influx as the potential number of residents in Dubai, we need to add around 70,000 units every year," he said.
Given the buoyancy in the real estate sector, and the huge institutional demand for Sharia compliant assets, analysts expects the issue to attract investors from across the region. "It may not be one of those blockbuster IPOs we saw in 2005 and 2006. However, the institutional demand alone will be enough for a smooth run," said an analyst with a regional investment bank.
Restrictions : Only GCC nationals can apply
Deyaar's IPO is open only to nationals of the UAE and the other GCC countries.
"We would have loved to keep the issue open to all nationalities. However, we are constrained by local and regional laws that allow only GCC nationals to own land," said chief executive Zack Shahin.
Can Expatriates living in Bahrain, buy this IPO.
If yes, what is the procedures, advice
I assume you're asking about expats who are not GCC nationals? In which case the answer is no, sorry.
However, GCC nationals living in Bahrain can buy into the IPO. Procedure from Bahrain might be tricky. In the past, I think investors have had to physically come to the UAE to sign up with the stockmarket for an investor number, and get the application forms from the IPO receiving banks. A broker would probably be the best person to talk to - especially if there's one that has offices in Bahrain and Dubai. See the UAE brokers section of the forum for more information. Or the list of UAE brokers on sharewadi.com
For more information, Shuaa has just produced a pre-IPO analysis of Deyaar (34 pages PDF file).
IPO proceeds will be used primarily to pay the outstanding balance on the cost of land acquired, and to fund new land acquisitions in the company’s primary and secondary target markets. In addition, the proceeds will also fund the development of Deyaar’s investment property portfolio. In all, the company is expected to engage in over AED 20 bn worth of projects over the next five years, funded by equity, Islamic debt and pre-sales.
We expect the company to record revenues of AED 2.25 bn in FY 07 up from AED 1.1 bn in FY 06. Revenue is projected to appreciate by a CAGR of 45%, during the projected period, to reach AED 7.1 bn by FY 11. We also expect Deyaar’s EBITDA to appreciate from AED 402 mn in FY 06 to AED 540 mn in FY 07, AED 923 mn in FY 08 and up to AED 1.39 bn by FY 11.
The company has witnessed very strong growth in earnings to-date, with net profits growing from AED 73 mn in FY 04 to AED 413 mn in FY 06. We expect growth to remain strong with net profits of AED 522 mn in FY 07 and AED 899 mn in FY 08. We expect net profits to record a CAGR of 24% from FY 07 to FY 11.
Total shares outstanding will be 5.778 billion (DIB will retain a 43% shareholding in Deyaar Development PJSC, another 2% have been alloted to founder shareholders).
So at par value, forward PE for 2007 is about 11, and for 2008 is about 6. Making them look a much better deal than the Air Arabia IPO.
Deyaar shares may float at more than 2 dhs - the DFM IPO seems to be a reasonable one to compare to the Deyaar IPO.
I didn't see if the Shuaa forecast made any allowance for IPO income. It's so large though that it probably won't be oversubscribed a huge amount - and it's limited to a smaller subscriber base than DFM and Air Arabia IPOs. _________________ UAE IPO list | posting guidelines
A few comments and a Deyaar IPO Prospectus now available. If you can find a copy of today's Gulf News (29 Apr 2007), there's a copy of the prospectus in the business section.
Shuaa Capital are the Lead Manager so contact them if any questions (tel+971-4-3199860 Sun-Thu 0900-1800). _________________ UAE IPO list | posting guidelines
In regards to Deyaar IPO subscription "Deyaar could be worth looking at further - but subscription only open to GCC and UAE nationals." If any investor is interested in participating in the IPO regardless of Expatriate or UAE National or GCC Nationals please send me a message.
I really need to express my concern to the size of the IPO at almost AED 3.2 billion.
sharewadi wrote:
I don't know about Gulf Navigation but DFM shares looked reasonably good value at 1 dhs each. Air Arabia didn't. Deyaar could be worth looking at further - but subscription only open to GCC and UAE nationals.
Ah, that may make a difference to amount of subscription.
In regards to Deyaar IPO subscription "Deyaar could be worth looking at further - but subscription only open to GCC and UAE nationals." If any investor is interested in participating in the IPO regardless of Expatriate or UAE National or GCC Nationals please send me a message.
I really need to express my concern to the size of the IPO at almost AED 3.2 billion.
Hello brokervic and welcome to Dubai Share Talk .
1. Why do you want potential subscribers to send you a message? Are you advertising something?
2. I don't follow your second statement. What is the concern you have? It is too big? _________________ UAE IPO list | posting guidelines
I am a little intrigued by the accounting of "Goodwill" by Deyaar.
As per Shuaa's report - page 26 - Deyaar has included 2.6 bn as Goodwill in its balance sheet. Technically, the current accounting rules do not allow accounting of internally generated "goodwill".
In regards to the Deyaar IPO, I wanted to clarify to the investors, that anyone that is interested in participating in the IPO can do so. An account can be setup in order to participate in the IPO for this and any future IPO's. I am addressing this issue becasue the previous column had stated that no expats can participate in the Deyaar IPO.
In regards to the Deyaar IPO, I wanted to clarify to the investors, that anyone that is interested in participating in the IPO can do so. An account can be setup in order to participate in the IPO for this and any future IPO's. I am addressing this issue becasue the previous column had stated that no expats can participate in the Deyaar IPO.
Erm, the reason for that information was because the Deyaar IPO prospectus said so ?
Deyaar Development IPO Prospectus:
Eligible Investors: The Offering will be limited to individuals and institutional investors that hold the nationality of the UAE or other countries of the GCC. Individual investors must be at least 21 years of age on the date of the closing of the Offering.
So I understand that to mean GCC expats resident here (or in other countries), but not expats who are citizens of non-GCC countries. What have I missed?
As Shuaa Capital are the Lead Manager, I guess you could confirm with them exactly who and who is not eligible. _________________ UAE IPO list | posting guidelines
There's a Deyaar IPO Prospectus summary available, with names of receiving banks and contact details.
A longer version (168 pages, PDF) of the Deyaar Development IPO Prospectus available here in Arabic and English. Has details of what Deyaar does and plans to do. Includes 2006 FY financial results and commentary. _________________ UAE IPO list | posting guidelines
Er, well, actually, there isn't any Deyaar IPO news.
It started on 06 May 2007, it's now 13 May 2007, and the Deyaar IPO closes on Wed 16 May 2007.
If an IPO was rocking, I would have thought there'd be some excitable press releases popping up. Just like the lack of news while the Air Arabia IPO was in progress in March this year - with a subdued subscription rate in the end, the lack of news about Deyaar seems significant.
Because the Deyaar IPO is so large, maybe it's not even going to be fully subscribed. _________________ UAE IPO list | posting guidelines
Shuaa Capital, the lead manager and sole bookrunner for Deyaar's ongoing IPO, has announced that in accordance with a Dubai government directive, it is to guarantee the allocation of a maximum of 20,000 shares to each UAE national employed by the Ministry of Education. Those included in the guaranteed allocation are all administrative, educational and technical staff starting at the kindergarten stage onwards.
A maximum of 20,000 shares? That seems a bit unfair. What if a teacher wanted to buy 50,000 shares? I guess it means they'll at least get 20,000 shares and the rest pro-rata depending on the oversubscription rate... _________________ UAE IPO list | posting guidelines
No news bout the Deyaar IPO ... DFM has healthy trading so far today ... so I guess ppl are wiseing up to IPO's ... but like all IPO's earlier most of ppl subscribe in the last few days ... the teachers allocation announced is quiet high compared to other IPO's before and was announced yesterday ... so i'm presuming that subscription levels might b low ...
Ah, well done Gulf News for not just printing the press release yesterday - which didn't mention the lack of demand.
Bit of a change from the Dana Gas IPO, in September 2005, with banks locking the doors against the deluge of subscribers.
Gulf News 16 May 2007:
Deyaar stares at reality as Dh3.178b IPO ends today
Staff Report
Dubai: A weak demand marked Deyaar's Dh3.178 billion initial public offering, the largest issue in the UAE, according to banking sources as its subscription closes today.
Subscription application moved slowly as some branches reported receiving just three to four applications per day, reflecting the market sentiment.
The Dubai Government recently allowed a maximum of 20,000 shares to each UAE national teachers to boost subscription. But the decision evidently did not help, as expatriates, who make up more than 80 per cent of the country's population, were left out of the subscription offering.
On offer are 3.178 billion shares, representing 55 per cent of Deyaar's share capital, at an offer price of Dh1 per share, in addition to 2fils as offering costs.
The IPO is open to UAE and GCC nationals, who can subscribe in two tranches: The first tranche, for 635.6 million shares, is earmarked for investors who choose to subscribe to a minimum of 10,000 shares and a maximum of 50,000 shares. The second tranche, for close to 2.6 billion shares, is open to those who subscribe to a minimum of 55,000 shares and above.
Receiving banks and institutions are spread across the UAE and the GCC. In the UAE they are: Dubai Islamic Bank; National Bank of Abu Dhabi; Abu Dhabi Commercial Bank; Union National Bank; First Gulf Bank; National Bank of Fujairah; Mashreqbank; Emirates Bank; Dubai Bank; Arab Bank; Finance House; Sharjah Islamic Bank; Dubai Commercial Bank; Commercial Bank International; and Standard Chartered Bank.
Subscribers in the GCC can subscribe through the branches of Standard Chartered Bank in Bahrain, Oman and Qatar. Refunds and allocations for subscribers in the UAE will commence on May 30.
I would have guessed something similar ZP, but in the end the Deyaar Development IPO oversubscription rate was 10x. I'm somewhat surprised. Anyway, congratulations to them - maybe the deluge at the last minute came about because of the news earlier this week that the Deyaar IPO was looking rather tepid.
Hmmm, articles use the words "subscribed" and "subscription" rather than "oversubscribed". Maybe that means the Deyaar IPO was only 9 times oversubscribed?
Khaleej Times 17 May 2007:
Deyaar IPO more than 10 times subscribed
BY ISSAC JOHN (Deputy Business Editor)
DUBAI — UAE's biggest initial public offering (IPO) — Deyaar's Dh3.178 billion subscription — was more than 10 times subscribed when it closed yesterday even as thousands more share applications remained under process.
Zack Shahin, the real estate major's chief executive, told Khaleej Times that he could confirm that subscription exceeded 10 times while the subscriber number crossed 50,000-mark as of 2pm yesterday with more applications being processed at some 160 bank outlets. "The overwhelming last minute rush for subscription has forced most banks to extend working hours up to 4.30pm," he said.
Maintaining that investor enthusiasm was in line with the company's expectations, Shahin said the response underscored the liquidity of the market and investors' confidence in Deyaar's strength. He said final tally, which would certainly be higher, would be known only after the application processing is completed by today.
Deyaar, a wholly-owned subsidiary of Dubai Islamic Bank (DIC), is one of the region’s leading real estate players, with over 17 residential and commercial projects across the UAE, Turkey and Lebanon. DIC, the third-biggest Shariah-compliant lender in the Gulf by market value, is selling 3.178 billion shares at 1.02 dirham each, equivalent to 55 per cent of the company. Proceeds from its IPO will be used to finance the company’s massive expansion in property development in a series of mega projects in the UAE as well as spearhead its growth in key strategic markets of Saudi Arabia, Qatar, Kazakhstan and India.
"Both the retail and institutional tranches are fully subscribed by a few multiples," he said. Deyaar should make a net profit of between Dh500 and Dh520 million this year compared to Dh412 million last year, Shahin has said. Deyaar would list on the Dubai Financial Market, likely in August, he said.
Only nationals from the UAE and the other Gulf Arab countries were allowed to buy shares. "The retail subscription has also been massive from all over the GCC excluding perhaps Bahrain."
Gulf News 17 May 2007:
Deyaar IPO closes on strong note
By Babu Das Augustine, Banking Editor
Dubai: The Dh3.178 billion initial public offering (IPO) of Deyaar, the real estate arm of Dubai Islamic Bank, closed yesterday and was oversubscribed, the chief executive officer of the company told Gulf News yesterday.
"The investor response has been excellent. We have crossed 10 times subscription. Thousands of last-minute applications are still under process and we expect to get the exact figure in the next couple of days," Zack Shahin said.
The IPO - the largest in the UAE - got off to a slow start on May 6 but subscriptions picked up as the closing date neared.
"Both institutional and retail tranches received manifold oversubscriptions. Investor response has been particularly very good from Kuwait, Saudi Arabia and the UAE," he said.
Institutional tranche represented 80 per cent of the issue. The 20 per cent retail tranche received more than 50,000 applications by Wednesday afternoon, Shahin said.
The retail subscriptions got a big boost as the Dubai government guaranteed a firm allotment of up to 20,000 shares to each of the UAE national staff working in the Ministry of Education.
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... why can expats own shares of Emaar (
.
. There was some news today/yesterday...
