CMA approves ‘Emaar the Economic City’ SR 2.55 billion IPO

Published July 11th, 2006 - 03:31 GMT

Emaar the Economic City (EEC), a consortium headed by Emaar Properties PJSC and a number of high profile investors from Saudi Arabia, today announced that the Capital Market Authority (CMA) of Saudi Arabia has approved its initial public offering (IPO) of SR 2.55 billion (US$679.9 million). The company also announced that it had received approval from the Ministry of Commerce & Industry (Ministerial Resolution No. 609 dated May 13, 2006) for its incorporation.


The share capital of EEC is SR 8,500 million (US$2.27 billion) consisting of 850 million shares with a nominal value of SR 10 (US$2.66) each. EEC will be offering 30% of this equity – 255 million shares – through the IPO at a nominal face value of SR 10 each thereby raising a total of SR 2.55 billion.


The IPO will open for subscription for 10 days from July 22, 2006 to August 2, 2006. The share allotment has been decided at a minimum of 50 shares of SR 10 each and a maximum of 25,000 shares of SR 10 each.


The IPO will facilitate financing of the King Abdullah Economic City (KAEC), to be built at a pristine location off the Red Sea in the north of Jeddah with an investment of SR 100 billion (US$26.6 billion).


SAGIA (Saudi Arabian General Investment Authority), the body responsible for inward investments into the Kingdom, is the prime facilitator for KAEC. SAGIA’s Investor Service Centre will facilitate the provision of services to potential investors. The Centre is SAGIA’s “one-stop” solution aimed at minimizing the number of formal steps associated with investment in the Kingdom.


Mr Amr Al-Dabbagh, SAGIA Governor said: “The King Abdullah Economic City project has accelerated at a tremendous pace since its launch in December last year. The IPO announcement takes the City to the next level with progress continuing on a fast track basis.”


Mr Mohamed Ali Alabbar, EEC Chairman, said: “We are delighted to have received approval from the CMA for this floatation. Our thanks go to CMA for all their support. EEC will signal the dawn of a new era of economic prosperity for the citizens of the Kingdom and the IPO is the best way for us to ensure that investors take part in this exciting project.


“In the past decade, Emaar Properties has built experience and knowledge on how to transform the power of ideas into reality. The company is now honoured to be part of this mega project that will create value added opportunities for the people of Saudi Arabia,” Mr Alabbar added.


HSBC and Saudi British Bank (SABB) were appointed as exclusive financial advisor, lead manager and lead underwriter to the IPO. Mr Ioannis Karapatakis, the HSBC Managing Director, Global Investment Banking Advisory, said: “We are honoured that we have been selected to advise, lead manage and lead underwrite this landmark IPO. EEC IPO will be the first greenfield IPO fully underwritten in Saudi Arabia. SABB has formed an underwriting syndicate where SABB is underwriting 50% of the offering (SR 1.275 billion; US$339.97 million) and Riyad Bank and the National Commercial Bank will equally sub-underwrite 50% of the offering.” Mr Karapatakis confirmed that all Saudi commercial banks will be acting as co-managers to the IPO.

KPMG Al Fozan & Bannaga are the registered auditors and reporting accountants while Baker & McKenzie are the legal advisors to the transaction.

EEC has also appointed 11 receiving banks to ensure that investors have access of a huge number of bank branches across the Kingdom to conveniently subscribe to the IPO. The 11 banks are: SABB, NCB (National Commercial Bank), Bank Al Bilad, Bank Al Jazira, Riyad Bank, Banque Saudi Fransi, Saudi Hollandi Bank, The Saudi Investment Bank, Arab National Bank, Al Rajhi Banking & Investment Corporation and Samba Financial Group.


KAEC, which will be a New Age City being built today for tomorrow’s generation of Saudi citizens, was officially launched by The Custodian of the Two Holy Mosques King Abdullah bin AbdulAziz AlSaud in the presence of HRH Prince Sultan bin Abdulaziz AlSaud, Saudi Crown Prince, Minister of Defence & Aviation and Inspector General, and His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai and several dignitaries on December 20, 2005.


KAEC’s six components - seaport, industrial district, education and healthcare zone, financial island, resorts and the residential area - will work seamlessly together to make it an important global destination and a focus area for the development of both heavy and light industry, services in various sectors and bring in a greater level of local investment as well as regional and international Foreign Direct Investment into the Kingdom and thus more job opportunities for Saudi youth.


This mega project will closely integrate 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. Based on initial forecasts, the project and its several components will create up to 500,000 employment opportunities in the various industries and service-oriented companies that will open in the City.

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