Dubai-based billionaire Hussain Sajwani has postponed an offer to acquire the remaining shares in Damac Properties PJSC.
Earlier this month, Maple Invest Co. Limited, an investment vehicle owned by Sajwani, offered AED2.2 billion ($599 million), making what it called “a voluntary conditional offer for the issued share capital of Damac not already owned by Maple and its affiliates”.
Sajwani, who owns a 72 percent stake in the developer, resigned as Damac’s chairman to avoid conflict of interest.
The announcement, which Bloomberg determined to be a 45 percent discount to the developer’s 2015 local listing, sparked a backlash among some investors who questioned the timing of the plan just as the property market is starting to improve following seven years of decline.
“The news this morning about Damac’s decision to postpone taking the business private is an interesting development. Although it is a natural process for a regulatory review regarding an acquisition, I believe that the postponement raises concerns about whether Mr Sajwani has perhaps made a hasty decision to take the firm private. We also have to remember that Damac has only been publicly listed on the Dubai Financial Market since January 2015 – which is not a considerable amount of time,” Ashley Williams, editor of Construction Week and special construction correspondent at Arabian Business said.
And in a filing to Dubai Financial Market on Tuesday it was revealed that the proposed deal was being put on hold.
A statement from Damac said: “With reference to the disclosure published on the Dubai Financial Market’s website dated June 9 2021 regarding the intention of Maple Invest Co Limited to acquire shares in the share capital of DAMAC Properties Dubai Co PJSC, and given that the Securities and Commodities Authority is undergoing a review in this respect, it has been decided to postpone the acquisition procedures until the review is concluded.”
The construction giant reported losses in 2020 and 2019 as the property market struggled with an oversupply that has hammered prices for the past seven years. The construction industry will deliver an estimated 62,000 homes in Dubai this year and nearly 63,500 in 2022, which would be the most since 2009, according to consultancy firm Knight Frank LLP.
“From a general industry perspective, Dubai has shown the world its capabilities to strive even through the Covid-19 pandemic, but we are still not out of the woods yet economically. Technology-driven off-site construction company Katerra followed Arabtec into bankruptcy this week and Damac has seen a downward financial trend since 2018. The company needs to make sure that the decision to take the firm private is in their best interests for future growth,” Williams said.
In a statement to the stock exchange on Sunday, Damac said an independent valuer and financial adviser had been appointed to help the board determine the financial fairness of the offer from the perspective of shareholders.
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