Dubai Meraas Unit Plans $689m IPO For Theme Park Project

A Dubai company plans to launch a $689 million initial public offer of shares this month as it builds a $2.9 billion amusement park complex which is key to the emirate’s drive to expand as an international tourist destination.

Dubai Parks and Resorts, part of the government-owned Meraas investment group, said on Tuesday it would sell 2.53 billion shares or 40 per cent of its outstanding shares between November 17 and November 30, at a price of Dhs1 each.

The company has started work on three linked theme parks that it says will help Dubai meet its target to double annual tourist numbers to 20 million in 2020 from 10 million in 2012, and treble tourism income over that period.

The 16 million square foot (1.5 million square metre) project on the outskirts of Dubai is to feature three theme parks: Motiongate, based on films made by DreamWorks Animation and Sony Pictures, LEGOLAND Dubai, and Bollywood Parks.

Hotel, shopping and other entertainment facilities are also planned, with completion scheduled by September 30, 2016.

Meraas estimates the project will cost a total of about Dhs10.5 billion, funded through Dhs4.2 billion of debt arranged by Goldman Sachs, and Dhs6.3 billion of equity. The equity will include the IPO proceeds, plus Dhs2 billion in cash and Dhs1.78 billion in land and previous expenses funded by Meraas.

The Dubai Parks IPO marks a revival of equity offers in the United Arab Emirates; they dried up as the global financial crisis erupted five years ago, but are now being buoyed by a strong rebound in the UAE economy and markets. Several offers have occurred this year and drawn heavy investor demand, including the $1.6 billion IPO of Emaar Malls Group.

Emirates Financial Services, Goldman Sachs and HSBC are acting as joint global coordinators for the Dubai Parks IPO, with EFG Hermes and Shuaa Capital also involved.

Ten percent of the offer will be allocated to retail investors, 25 per cent to wealthy individuals wishing to buy a minimum of five million shares each, and 60 per cent to institutions ordering at least 10 million shares. The remaining five per cent is reserved for the UAE government’s Emirates Investment Authority.