Nakheel plans to borrow Dh4.4b amid IPO plans

Real estate developer Nakheel is considering launching an initial public offering (IPO) within the next 12 months and plans to raise Dh4.4 billion in bank loans.

If Nakheel, a unit of Dubai World, is listed on a stock exchange, it could become one of the biggest companies in the Gulf.

“In the next 12 months time, we need to pursue whether there could be an IPO or not,” Nakheel chief executive Chris O’Donnell said, according to a Reuters report.

A spokesperson for Nakheel yesterday confirmed to Gulf News that an IPO is being considered within the next year.

Fahd Iqbal, a senior analyst with investment bank EFG-Hermes, said such an IPO could help the company’s expansion aims.

Transparency

“It is [an IPO] a means to raise funds over time. A lot of companies have international ambitions and regional ambitions and want to expand over several geographies,” Iqbal said.

“And transparency is better if the company is listed,” he added.

However, Nakheel’s chairman Sultan Bin Sulayem said early this year that Nakheel was unlikely to sell shares to the public and he was not “keen” on a share sale. “We are continually able to fund our operations and there is no pressure to IPO,” said Bin Sulayem in an interview at the World Economic Forum in Switzerland in January.

O’Donnell said that there are also plans to purchase assets, including commercial real estate, hotels and retail space, in the US, UK and his home country of Australia.

Cyclical decline

“These markets are definitely in a cyclical decline and they will offer some very good buying opportunities in the next 12 to 18 months – I don’t think any earlier than that,” O’Donnell said.

Nakheel already owns around $20 billion in assets outside of Dubai.

“We’ll be redirecting our cash to where the major opportunities are. At the moment, the opportunities are Dubai-based,” said O’Donnell.

Nakheel aims to raise Dh4.4 billion through a syndicated and Islamic loan.

Emirates NBD, mashreq, Noor Islamic Bank and Samba Financial Group are arranging the loan, which will be funded in dollars and dirhams and matures in January 2011, Nakheel said in a posting to the Dubai International Financial Exchange yesterday.

Gulfnews

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