Emaar the Economic City IPO oversubscribed in three days; SR3.5 billion collected in four days

Published July 27th, 2006 - 05:21 GMT

The ten-day initial public offering (IPO) of Emaar the Economic City (EEC), which opened on July 22, 2006, has been over-subscribed in just three days.  EEC is a consortium headed by Emaar Properties PJSC and a number of high profile investors from Saudi Arabia.

 

As at the end of the fourth day of subscription, 1,216,004 applications were received from 4,570,080 subscribers, with the amount subscribed already over SR3,534,644,500.

 

“We thank the Saudi investors for their confidence in Emaar the Economic City,” said Mr 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 to the Kingdom.”

 

“We thank the Capital Market Authority (CMA) of Saudi Arabia and the Saudi investors for reposing their confidence in us,” said Mr Nidal Jamjoom, Chief Executive Officer, EEC. “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.”

 

Mr 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 on a pristine location off the Red Sea in the north of Jeddah. 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 per cent 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 August 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 Riyad Bank and National Commercial Bank are sub-underwriters. HSBC are exclusive financial advisors on the IPO and SABB is the lead manager. KPMG Al Fozan & Bannaga are the registered auditors and reporting accountants while Baker & McKenzie are the legal advisors.

 

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 in the City.


King Abdullah Economic City will undertake mixed-use developments in its six components: a modern world-class seaport, industrial district, financial island, educational and healthcare zone, resorts and the residential area. Groundwork on KAEC 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.


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