Emicool's IPO likely to take place this year, says Union Properties chairman

The owners of Emicool plan to sell a 30 per cent stake in the district cooling company through an eventual IPO.

Joint owners Union Properties and Dubai Investments each plan to sell 15 per cent of district cooling company Emicool by the end of this year, according to the Union Properties chairman Khalid bin Kalban.

Mr bin Kalban, who is also managing director and chief executive of Dubai Investments, said that the stakes were likely to be sold via a pre-IPO deal ahead of an official listing.

This is expected to take place by the end of the year, although it will depend on the state of the markets and the results of a valuation exercise which is currently under way, Mr bin Kalban said.

“The plan is to offload that 30 per cent, hopefully, if the market situation allows, by the end of this year. It will be a pre-IPO and then the company will be IPO’d.”

He said that it had not yet agreed a deal with a potential buyer, arguing that it was still awaiting the outcome of a report placing a valuation on the Emicool business.

“There are many parties who are interested, but no one has been selected yet,” he said. “We are waiting for the evaluation to come through. And then we will decide.”

The stake sale has been on the cards for at least 18 months, but turmoil on local financial markets has meant that plans to bring the business to market have twice been postponed.

“The market situation is very unpredictable, and there is not much liquidity,” Mr bin Kalban said. “Even though there are some good companies that are operating and listed, you know the value of their shares have not been … most of them are trading below their book value.”

Union Properties declared a pre-tax profit of Dh211.4 million for 2016, which was a 51 per cent decline on the Dh434.6m achieved last year, and revenue was 22 per cent lower at Dh1.13 billion.

However, this was partly due to a gain on valuation of its property of Dh122m last year, compared with almost Dh670m in 2015.

Emicool reported an improved performance, with revenue up by 15 per cent to Dh353.1m and profit increasing by 27 per cent to Dh73.3m. By year-end, the book value of its net assets stood at almost Dh710m. During the year, Emicool was appointed by Damac to provide district cooling to the Damac Hills master development.

“It’s a successful company,” Mr bin Kalban said. “They have been able to win many projects in the last 12-18 months.”

Union Properties’ shares were suspended on Thursday on the instructions of the Securities and Commodities Authority amid market rumours about the company and Mr bin Kalban’s own position.

However, when asked about this, he said: “There are board changes, but I am there. As far as the election and the AGM, everything was OK. There were no issues.”

He said that there is often speculation surrounding the company’s shares, but that this was not something that concerned him.

“We need to drive the company to be a solid company rather than sit and speculate on the shares.”

Union Properties’ shares closed on Wednesday (before its AGM) at Dh1.01 – 10.6 per cent lower than at the start of the year.

A report published by PwC last month showed that the amount of money raised through IPOs in the Gulf region last year dropped by 44 per cent last year to US$782m – its lowest level since 2013 as a result of low oil prices, fiscal tightening and a lack of liquidity in the financial sector.

However, Steve Drake, the head of PwC’s capital markets team in the Middle East said: “As the regional geopolitical scene stabilises and oil prices recover, market participants may regain confidence sooner than expected. There are a number of positive signs for 2017 and we hope that the capital market in the GCC will overcome 2016 shock waves.”


Follow The National’s Business section on Twitter