By Andy Sambidge
Palm developer reportedly eyeing initial public offering in bid to raise extra funds for projects.
Palm developer Nakheel is reportedly considering plans for an initial public offering (IPO) to raise up to $15 billion.
A report on Monday by newswire Bloomberg quoted unnamed bankers that the developer, the UAE's biggest developer by project value with nearly $80 billion worth of schemes in the pipeline, is also looking for IPO managers.
A Nakheel spokesperson neither confirmed nor denied the move, and was quoted by UAE daily Gulf News on Tuesday as saying: "A company as large as Nakheel is constantly exploring a number of capital raising options, be it traditional debt issues, private equity, real estate investment trusts and direct project financing from banks."
And when asked about the IPO move, Sultan bin Sulayem, chairman of Nakheel, told the Khaleej Times: “I have no comments.”
Companies worldwide have raised about $86 billion in IPOs this year, down 66 per cent from last year. IPOs in six Gulf Arab countries raised $11.7 billion in the first nine months of 2008, according to a report by private equity investor Gulf Capital in October. On Sunday, Nakheel announced it was delaying several of its flagship projects, including the Trump International Hotel and Tower, in addition to axing 500 jobs amid the global financial crisis.
"Nakheel is delaying long-dated infrastructure work on some of our projects in order to ensure that our business model is aligned to meet market demand," the company said in a statement.
"We have the responsibility to adjust our short term business plans to accommodate the current global environment."
Nakheel said the Frond N villas, Gateway Towers and the Trump tower on the Palm Jumeirah, one of three palm-shaped islands the developer is building off Dubai's coast, would all be delayed.
The company said much of its Waterfront project, a series of man-made islands set to be twice the size of Hong Kong, would also be pushed back.
Nakheel said work would continue on Madinat Al Arab, Venetto, Badra and the Canal District, but areas of the project, including construction of six man-made islands, would be put on hold.
The Universe, a series of man-made islands in the shape of the sun, the moon and the planets that wraps around Nakheel's The World project, has been delayed, the company said, with work restricted to preliminary engineering studies.
On the Palm Jebel Ali, the second largest of the three Palm islands, Nakheel said work on the fond villas and infrastructure for the crescent would continue, while other phases would be delayed.
It did not give details of how long any of its projects would be delayed for.
Nakheel said work on all other projects - which include The World man-made archipelago and Palm Deira, the largest of the Palm islands - would continue as planned.
Earlier on Sunday Nakheel said it had cut 15 percent of its workforce as it scales back projects due to the economic climate.
Nakheel is the latest in a long line of Dubai-based real estate developers to announce layoffs, which includes Damac Holding, Omniyat and Tameer Holding Investment.
Let's get real. There is no way this can happen for at least six months. Why is AB jumping the gun based on some speculative news ?
In my view, this about-turn is really making things worse. First they're not affected. Woohoo we're building the world's tallest tower, now we're delaying most projects. Make up your mind. This flip-flopping doesn't speak well about their competency. I think the powers that be have made a conscious decision to try to save the market by sacrificing off-plan projects. They're hoping a shortfall in supply will help steady then increase prices. I don't see it happenning.