JEDDAH, 27 July 2006 — The ten-day initial public offering (IPO) of Emaar Economic City (EEC), which opened on July 22, has been oversubscribed in just three days. EEC is a consortium headed by Dubai-based Emaar Properties and a number of investors from Saudi Arabia.
At the end of the fourth day of subscription, 1,216,004 applications had been received from 4,570,080 subscribers, with the amount subscribed already exceeding SR3.50 billion.
“We thank the Saudi investors for their confidence in Emaar Economic City,” said Mohamed Ali Alabbar, chairman, EEC. “Their overwhelming response to the IPO is an indication of their trust in the King Abdullah Economic City (KAEC) project. The SR100 billion project will usher in a new era of economic prosperity in the Kingdom,” Alabbar added.
Chief Executive Officer of EEC Nidal Jamjoom said, “We thank the Capital Market Authority (CMA) of Saudi Arabia and the Saudi investors for reposing their confidence in us.”
He added “The huge turnout to the IPO highlights investor interest in KAEC, which will work in tandem with the Kingdom’s on-going drive to expand the economy, create employment opportunities for its youthful population and function as a catalyst to attract foreign investment, global trade, commerce and industry.”
Ioannis Karapatakis, the HSBC managing director, Global Investment Banking Advisory, added: “The EEC IPO is the first Greenfield IPO fully underwritten in Saudi Arabia. The overwhelming response to the IPO is a cause for celebration for the entire market, and proves that companies with sound fundamentals will continue to enjoy the confidence of investor.”
The IPO facilitates financing of the KAEC, to be built in a location off the Red Sea in Rabigh. The single largest private sector initiative in the Kingdom, KAEC covers a Greenfield site of 55 million sq m. Saudi Arabian General Investment Authority (SAGIA), the body responsible for inward investments to the Kingdom, is the prime facilitator of KAEC.
EEC is offering 30 percent of its equity - 255 million shares - at a nominal face value of SR10 to raise a total of SR2.55 billion. IPO shares have a minimum subscription level of 50 shares and a maximum subscription level of 25,000 shares of SR10 each. The IPO will close on Aug. 2, 2006.
EEC appointed 11 receiving banks to ensure that investors have access to a large number of bank branches across the Kingdom to subscribe to the IPO. SABB is the lead underwriter and lead manager, Riyad Bank and National Commercial Bank are sub-underwriters. HSBC is exclusive financial adviser on the IPO. KPMG Al-Fozan & Bannaga are the registered auditors and reporting accountants while Baker & McKenzie are the legal advisers.
Based on initial forecasts, KAEC and its several components have the potential to create up to 500,000 employment opportunities in the various industries and service-oriented companies that will open up in the city.
Meanwhile, EEC has made rapid progress on ground and site work for KAEC. Groundwork on KAEC, unveiled at the end of 2005, is going full steam ahead. The structural steel work for the presentation center has been executed and installation of precast walls will be completed in a fortnight. Work is also underway on the project’s first boulevard - a 15 km long stretch that features over 3,000 palm trees.
“Excavation work for the first city canal to run through the Red Sea Village, a component of KAEC, has started. Geotechnical investigations are being conducted for dwelling units, and designs for one of the main entry gates, the first Corniche Park and marina have been completed. There are over 500 workers on-site now, and the number will exceed 1,000 soon,” Jamjoom said.
During the first three years, construction will be focused on four major areas: The Port; Industrial areas; the Resort District comprising two major beachfront hotels, the first golf course and associated villas; and several apartments and office buildings in the Town Center.
Approved by the Ministry of Commerce & Industry on May 13, 2006, for its incorporation, EEC aims to become “the largest property development company in the Kingdom and an investor in a diversified portfolio of high quality real estate assets,” Jamjoom added. The overall project will be completed in stages, with the first group of commercial houses and residents expected to take possession within 30 to 36 months.
