Dubai-based billionaire Hussain Sajwani offered to take over the rest of Damac Properties PJSC at a discount of nearly 45 percent to the developer’s local listing in 2015, the latest bid to buy out minority shareholders in the United Arab Emirates over the past year, Bloomberg reported.
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,” according to separate statements on Wednesday.
Sajwani who owns a 72 percent stake in the developer, resigned as Damac’s chairman to avoid conflict of interest, Arabian Business’s sister publication Construction Week reported.
Damac traded below the 1.3 dirhams per share offer price on Wednesday. The stock dropped as much as 6.2 percent before paring its drop to 1.5 percent at the close, valuing the entire company at 7.74 billion dirhams.
The Damac Properties board of directors announced on Wednesday it has received a formal offer from the majority shareholder through Maple Invest Co. Limited, to acquire 100 percent of the issued and paid up ordinary share capital of Damac, according to a statement from the company on the Dubai Financial Market website.
Maple Invest Co Limited on June 8 made “a firm intention to make a voluntary conditional offer for the issued share capital of Damac not already owned by Maple and its affiliates”, according to a statement.
A statement by Alpha Star Holding III Limited on Nasdaq Dubai, said: “There is a conflict of interests between Mr Hussain Ali Habib Sajwani (as a shareholder in Maple) and those of Damac PJSC and its shareholders (other than Maple and its affiliates).
“In order to manage this conflict of interest, Mr Hussain Ali Habib Sajwani has tendered his resignation as chairman and board director of Damac PJSC on June 8, 2021.”
Alpha Star Holding III Limited is the ‘issuer’ of the $500m Trust Certificate due in 2022, of which Damac Real Estate Development Ltd – a fully-owned subsidiary of Damac Properties – is the ‘guarantor’.
Currently Maple has direct and indirect shareholding of 88.106 percent in Damac Properties.
Damac listed in Dubai’s main bourse in 2015 in an exchange for shares that were traded in London since 2013. The company raised about $375 million with its UK IPO.
Sluggish trading, a slump in prices and liquidity, and a desire by companies to escape investor scrutiny have been driving efforts to take public companies private in Dubai.
Emaar Properties PJSC said in March it will effectively delist one of its units for about two-thirds of its original public-offering price. Late last year, government-controlled Meraas Holding LLC proposed taking DXB Entertainments private at a 33 percent discount.
Emaar Malls’s de-listing plans paved the way for Damac and the stock market will be left with less depth as a result, according to Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital Ltd.
The trend may have repercussions for a market that’s struggling to sustain interest and risks depriving investors of exposure to one of the emirate’s crucial sectors.
Damac has reported losses in 2020 and 2019 as the property market struggled with an oversupply that 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.
Sajwani may need to offer a premium of 5 percent to 10 percent “if he wants to leave his investors with a good taste”, according to Yasin.
“The premium that used to be there for public companies in the real estate industry is no longer there,” he said. “Real estate firms are lagging and managements are under pressure at a time recovery has some time to go.”
In another announcement it was confirmed that Damac is to hold “a meeting of the board of directors on June 13 2021, to appoint an independent committee of the board of directors ot Damac PJSC”.
The meeting will “review and approve” the appointment of the legal advisor, valuer and financial advisor for the purposes of evaluating the offer to acquire 100 percent of the issued and paid-up capital of Damac PJSC received from Maple Invest Co. Limited.
-With Bloomberg
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