This morning's Times of London reports Emirates (EK) is considering an IPO that could value the Gulf carrier at up to $20 billion. It quotes Sheikh Ahmed bin Saeed al-Maktoum, chairman and chief executive of Emirates, saying that an IPO was now part of the airline's strategy.
Sheikh Ahmed said: "I think more and more Dubai companies will see that this is important in the near future. The DP World IPO is a very positive thing. I think for sure Emirates will also, in the future, do something like that."
The airline has, to date, tried to dampen speculation of an IPO – and continues to deny there is a schedule in place. Just because it hasn't set a date, crossed the T's and dotted the I's, doesn't mean it is not happening.
This morning's news, combined with last week's DP World IPO announcement, will inten! sify scrutiny on the carrier. The airline is one of the world's fastest growing, and has placed the biggest order of the A380 superjumbo.
The importance of a successful float for Emirates cannot be underestimated. The carrier is one the jewels in the crown of Dubai Inc, but has long been criticized by international competition for benefiting from government subsidies – an accusation Emirates denies. Opening up to the market would require the books to be opened.
The Times says the float would be partially listed in Dubai, further boosting the fledgling DIFX. A second listing on the London Stock Exchange, giving access to international capital markets, would also make sense.
Front page of emirates today, talk of listing on both the dfm and difx.
I wonder if it will affect Air Arabia
Emirates Today 30 October 2007:
Investors will have another chance to buy into the Dubai story as Emirates airline prepares for a share float that will value the company at more than $20 billion, or Dh73bn.
Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates, said an initial public offering – or IPO – was now part of the major airline’s strategy.
The move comes nine days after international ports operator DP World announced it would list 20 per cent of its stock on the Dubai International Financial Exchange next month. This will be the largest IPO in the Middle East to date – and the first sale of shares by a Dubai Government-owned company.
“The DP World IPO is a very positive thing,” Sheikh Ahmed told British newspaper The Times. “I think for sure Emirates will also, in the future, do something like that.
I think more and more Dubai companies will see that this [an IPO] is important in the near future.” Analysts believe Emirates, the Middle East’s largest carrier, is likely to seek a primary listing in Dubai of up to a quarter of its stock.
The airline’s president, Tim Clark, told newswires the company’s valuation could be as high as $30bn, or Dh110bn.
“Based on our multiples and profitability, and our Heathrow slots, I would say we should be valued at between $20bn and $30bn,” he said, adding that “$20bn is a minimum”.
A spokesperson for Emirates confirmed Sheikh Ahmed’s comments. “As expressed by our chairman, an IPO rests with our owners, the Government of Dubai,” he said.
Emirates, with a fleet of 110 aircraft, is not just one of the fastest growing airlines in the world, it is also one of the most profitable. Over the past three years the carrier’s profit has grown at a rate higher than 10 per cent a year.
It has an additional 112 aircraft on order worth more than $30bn at list prices. And it is the largest customer for the Airbus A380 with 55 superjumbos on order.
The airline is taking delivery of an aircraft a month on average and is due to receive its first A380 in August 2008.
“The plan is to increase the fleet size to 180 aircraft by 2013,” Clark said last month.
“That would boost the network of 85 destinations to 110 by adding destinations in South and North America, Africa and East Asia,” he said.
Rumours about Emirates buying British Airways have been circulating. But Sheikh Ahmed ruled out a bid saying Emirates would focus on its own growth strategy.
Emirates is likely to float on both the Dubai Financial Market (DFM) and Dubai International Financial Exchange (DIFX), a source close to the two markets has told Emirates Today.
This would see the airline’s initial public offering (IPO) divided into two tranches so that local investors could trade the stock on the DFM, while international players could do the same on the DIFX.
The source claims an Emirates IPO would provide a major support for Dubai’s capital’s markets, with the DIFX by then rebranded the Nasdaq DIFX, although no timescale has been announced for the airline floatation.
Analysts believe Emirates will follow the lead of DP World, which this month announced an IPO to float 20 per cent of the company, enabling the Dubai Government, which wholly owns the airline, to retain control.
“Twenty per cent would be enough for an initial IPO, although it depends which market Emirates lists on – I suspect the DIFX,” said Sherif Abdul Khalek, Al-Futtaim HC Securities dealing room manager.
“Emirates is becoming one of the largest airlines in the world and this will boost its profile even further. Emirates will be a blur chip stock on the DIFX,” he said.
Typically, a well-established firm with no liquidity problems, such as Emirates, would not float more than a fifth of the company, according to Mohamed Alami, Naeem Shares and Bonds relationship manager.
Alami said the size of the IPO would depend on whether Emirates opts for floatation of part of the existing company or a rights issue to increase its capital.
“If it’s a rights issues then the IPO will depend on how much cash the company wants to raise,” Alami added.
The proposed IPO suggests Emirates is planning another bold expansion, perhaps using the cash generated to open new routes or acquire additional craft. It currently has a fleet of 110 aircraft, with a further 112 on order worth a combined Dh110 billion.
“Emirates is expanding fast and so investors will want to be part of the IPO,” said Sanyalaq Manibhandu, Mac Sharaf Securities head of research.
“This means we will soon see the part-privatisation of DP World and Emirates and I expect the likes of Emirates Post and Dubal [Dubai Aluminium] to follow in the coming quarters and years,” Manibhandu added. EFG Hermes yesterday announced that customers registered to trade on the DFM can now use this account to do the same on the DIFX.
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