Dubai Islamic launches Deyaar IPO

Dubai Islamic Bank will sell a stake in its property arm starting on Sunday in the UAE's largest initial public offering, which analysts said should be oversusbcribed despite falls in Dubai's bourse this year.

Dubai Islamic Bank seeks to raise 3.18 billion dirhams ($866 million) selling shares in property unit Deyaar in what would be the Gulf's fourth-largest initial public offering. Dubai Islamic, the third-biggest sharia-compliant lender in the Gulf by market value, plans to sell 3.178 billion shares at 1.02 dirhams each, equivalent to 55 percent of the company. Only nationals from the UAE and the other Gulf Arab countries - Saudi Arabia, Kuwait, Qatar, Oman and Bahrain - can buy shares.

Deyaar's IPO is the first in the UAE since low-cost carrier Air Arabia raised only about 50 percent more than it hoped to in an offering in March. Analysts blamed that on weak market sentiment. Dubai's index is the second-worst performer in the Gulf this year, down 7.16 percent, after falling more than 44 percent last year. Gulf Arab investors routinely piled into IPOs during and after a 2005 stock market rally in the region, whith a public offering of Dubai-based mortgage financer Tamweel ending 500 times oversubscribed.

Deyaar's net profit should be between 500 and 520 million dirhams in 2007, Chief Executive Zach Shahin told Reuters last week. The company made 412 million dirhams last year. Shuaa Capital, the IPO's arranger, said it expected Deyaar's net profit at 522 million dirhams in 2007 and 899 million dirhams in 2008. Source