Mr. Hussain Sajwani, a property developer in Dubai, plans to take luxury developer Damac Properties private by purchasing the company’s remaining shares through an investment vehicle he owns.
According to a document filed at the Dubai Financial Market, Mr. Sajwani, who now owns 72 percent of the company, submitted an offer to acquire the remaining shares for $0.35 per share, amounting to around $595 million. He has also resigned from the board as chairman after making the bid due to a conflict of interest.
Mr. Sajwani’s company, Maple Invest, based in the British Virgin Islands, “has an intention to make a voluntary and conditional offer to acquire shares in Damac’s issued and paid-up share capital that will result in it owning no less than 90 percent and up to 100 percent” of the company’s shares, according to the statement.
Mr. Sajwani aims to submit a mandatory offer for the remaining shares under a “squeeze out” agreement after he secures acceptance from more than 90 percent of the shareholders. He then plans to delist the company, the statement said.
Damac, which developed the Middle East’s only Trump-branded golf course, has reported six successive quarterly losses, and its share price has dropped by nearly 68 percent since its August 2017 high.
According to the statement, Damac will conduct a board meeting on June 14 to discuss the offer.
The company has projects in the UAE, Lebanon, the UK, Jordan, Saudi Arabia, and Qatar. According to Damac’s website, as of March 31, it has delivered 33,334 residences and had a development portfolio of 33,000 additional units in various levels of completion and planning.
Mr. Junaid Ansari, Head of Investment Strategy and Research at Kamco Invest remarked that “We believe that the offer from its largest shareholder comes at a turning point for the company. In its recent quarterly earnings, it was reported that the losses mainly reflected lower revenue recognition as many projects are nearing completion. In addition, the real estate market in Dubai has seen a strong recovery over the last few months and the trend is expected to continue in the near-term.”
Both of these factors should result in more opportunities being developed in one of the key real estate players in Dubai’s real estate market, he added.
According to S&P Global Ratings, the bid is not likely to have any effect on the ratings of bonds issued by Damac Properties’ wholly-owned subsidiary, Damac Real Estate Development.
“We understand that delisting will not have any effect on Damac’s balance sheet, since the consideration will be paid by the acquirer. We also note that the company cannot distribute dividends due to restrictions under its bond indenture. Therefore, we expect Damac’s credit metrics will be unchanged,” the ratings agency added.