Saudi approves Economic City offering

Emaar Economic City (ECC), a consortium headed by Emaar Properties and Saudi investors, has announced that the Capital Market Authority (CMA) of Saudi Arabia has approved its initial public offering of US$679.9 million. The company has also received approval from the Ministry of Commerce and Industry for its incorporation.

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By  Andrew White Published  July 16, 2006

Emaar Economic City (ECC), a consortium headed by Emaar Properties and Saudi investors, has announced that the Capital Market Authority (CMA) of Saudi Arabia has approved its initial public offering of US$679.9 million. The company has also received approval from the Ministry of Commerce and Industry for its incorporation. The share capital of ECC is US$2.27 billion, consisting of 850 million shares with a nominal value of US$2.66 each. EEC will be offering 30% of this equity - 255 million shares - through the IPO to raise US$679.9 million that will help facilitate financing of the US$26.6 billion King Abdullah Economic City to the north of Jeddah. The IPO will open for subscription on July 22 and closes on August 2, 2006. The share allotment has been confirmed at a minimum of 50 shares and a maximum of 25,000 shares, of US$2.66 each. EEC has appointed 11 receiving banks to ensure that investors have access to bank branches across the kingdom to subscribe to the IPO within the stipulated ten day period. The banks include SABB, National Commercial Bank, Bank Al Bilad, Bank Al Jazira, Riyad Bank, Banque Saudi Fransi, Saudi Hollandi Bank, The Saudi Investment Bank, Arab National Bank, Al Rajhi Banking & Investment Corporation and Samba Financial Group. Amr Al Dabbagh, governor at the Saudi Arabian General Investment Authority, said: “The King Abdullah Economic City project has accelerated at a tremendous pace since its launch in December last year. The IPO announcement takes the city to the next level with progress continuing on a fast-track basis.” Meanwhile, Citigroup, the biggest US banking group, has mandates for at least four regional IPOs but has confirmed it is unlikely to launch them this year due to the weakness of the region’s markets. “When you see a big correction in the market generally, it is a time when people don’t think it is a time for launching an IPO. So you will see some slowing down of transactions,” said Michel Accad, Citigroup’s head of corporate and investment banking for the Middle East and North Africa region. Share prices in the UAE have fallen by 37%, in Saudi Arabia by 23% and in Qatar by 27%, as part of a region-wide correction that came at the start of the year. “We have some mandates,” he continued. “We have a couple of mandates on the GDR (global depositary receipts) side and we have one or two mandates on the IPO side, regionally. Are we going to launch them this year? Probably not, that is certainly going to be our decision and our recommendation. I think [the issues] would be worth postponing.” Citibank, a founder member of the Dubai International Financial Exchange when it launched last September, has so far managed three IPOs on the exchange, including that of Lebanese telecom firm Investcom.

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