By Zainab Fattah
June 30 (Bloomberg) -- Emaar Properties PJSC, the Dubai
property developer that announced a plan to combine with part of
Dubai Holding LLC last week, may have to raise funds if it
proceeds with the transaction, Nomura Holdings Inc. said.
Emaar, the Middle East’s biggest developer, is in talks to
merge with three units of Dubai Holding, a state-controlled
organization that’s also based in the sheikhdom. The deal would
be the largest in the Dubai property industry this year.
“Emaar may have to raise equity, and possibly a lot, to
support its private development counterparts,” Chet Riley, a
Dubai-based analyst at Nomura, wrote in a note to clients.
Emaar, which is building the world’s highest tower, said a
merger with Dubai Properties LLC, Sama Dubai LLC and Tatweer
LLC, the Dubai Holding units, could generate “exceptional”
cost savings amid a glut of homes that pushed property prices
down. The consolidation may be completed in October.
“If capital needs to be raised for a merged entity, which
we would think is inevitable, the buy case for any equity raise
may not be strong and the government may have to weigh into the
merger.”
The combined company would have debt of 13.4 billion
dirhams ($3.65 billion), or 7 percent of its total assets, Emaar
said June 28. Emaar’s own debt amounted to 10 billion dirhams,
15 percent of the total book value in assets, at the end of
March.
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