“Full steam ahead” for Economic City project

Emaar Economic City (EEC) has outlined a series of company by-laws and appointed an auditing team, following the record-breaking response to its IPO in July.

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By  Andrew White Published  September 17, 2006

Emaar Economic City (EEC) has outlined a series of company by-laws and appointed an auditing team, following the record-breaking response to its IPO in July. EEC, a consortium of global real estate major Emaar Properties and a number of high-profile Saudi investors, confirmed at its constituent general meeting (CGM) that the capital had been fully subscribed, and approved the company’s pre-incorporation costs. EEC is developing the prestigious King Abdullah Economic City (KAEC), a US$26.7bn mixed-use development over 55 million sq m of greenfield land. Net proceeds from the IPO will go directly to the development of KAEC. “Today’s CGM is a milestone for EEC,” said EEC chairman Mohamed Ali Alabbar. “The company has been entrusted with a great responsibility – of developing a unique project of stupendous dimensions that ushers in a new era of economic prosperity to the Kingdom,” continued Alabbar. “The project, when completed, has the potential to generate more than 500,000 jobs for young Saudis. “With the Saudi Arabian General Investment Authority (SAGIA) as its prime facilitator, KAEC will play a critical role in the housing, education, healthcare, financial and economic sectors of the Kingdom,” he added. Whilst EEC leads the master-planning and development of KAEC, being built on a pristine location off the Red Sea in the north of Jeddah, the Saudi Arabian General Investment Authority - the body ultimately responsible for inward investments into the Kingdom - is the prime facilitator for KAEC. With an authorised share capital of US$2.3bn, comprising 850 million shares of nominal value US$2.6 each, EEC offered 30% of the equity, fully subscribed by the public. Open only to Saudi nationals, the IPO was for 255 million shares at a nominal value of US$2.6 each. Over 10 million Saudis – approximately half the country’s national population - subscribed to the IPO. This represents a record for the Kingdom. The IPO was oversubscribed by 2.82 times and received 2.8 million applications, with the total amount subscribed standing at US$1.9bn. “The construction of KAEC is going full-steam ahead. The Custodian of the Two Holy Mosques King Abdullah bin Abdul Aziz Al Saud has personally toured the site and monitored the construction. His vision and constant support is our driving force and we are aware of the great responsibility entrusted with us,” said Alabbar. Alabbar confirmed that EEC were taking steps to list the company on the Saudi Stock market, and revealed that the company would soon embark on a wide-ranging recruitment programme. The drive will be focused primarily on the recruitment of qualified Saudi nationals, especially in senior positions, to lead the development of the KAEC. “EEC will be committed to pursuing a proactive role in assessing the progress of the KAEC project and ensuring that it goes according to budget and on-schedule,” added Alabbar. A unique socio-economic initiative, KAEC will undertake mixed-use developments in its six components: a modern world-class seaport, industrial district, financial island, educational and healthcare zone, resorts and a residential area. The overall project will be completed in stages, with the first batch of commercial houses and residents expected to take possession in the last quarter of 2008. “The CGM is the first step in bringing KAEC and EEC closer to the investors by approving pre-incorporation costs and confirming the in-kind contribution of shares,” said Nidal Jamjoom, CEO at EEC. “As the first step we have also approved the by-laws for the company and appointed Ernst & Young as the first auditors.” UK-headquartered professional services firm Ernst & Young is one of the largest such companies in the world. It already acts as auditor for – amongst others – Emaar, Nakheel, Walmart, Google, Time Warner, BP and American Airlines. The ‘Big Four’ accountancy firm registered revenues of US$16.9bn for the fiscal year 2005, and employs over 106,000 people worldwide.

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