Qatar, Kuwait Wealth Funds Invest in Dubai Parks IPO

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Sovereign wealth funds from Qatar and Kuwait are among institutional investors that bought shares in the initial public offering of Dubai’s new theme park developer and operator.

Kuwait Investment Authority, Qatar Investment Authority, Gulf family offices and global institutional investors helped Dubai Parks & Resorts raise 2.53 billion dirhams ($690 million), the company said in a statement today. The institutional tranche was oversubscribed 65 times, attracting about 100 billion dirhams, while local investors made 10.9 billion dirhams of offers, according to the statement.

Dubai Parks & Resorts is building three theme parks — Motiongate Dubai, Bollywood Parks Dubai and Legoland Dubai — and a 500-room hotel on a stretch of desert halfway between Dubai and Abu Dhabi. A surge in Dubai’s tourist and retail industries caused property prices to climb at the fastest pace in the world last year.

“Theme parks are the missing link from Dubai’s tourism story and we expect any decent park to do well,” said Asjad Yahya, an analyst at Dubai-based investment bank Shuaa Capital. Also “investors are coming in at the same terms as the founding shareholder, Meraas, which creates a very interesting play potentially.”

The three theme parks will open by October 2016 and are expected to attract 6.7 million visitors the following year, according to the company.

Oil Rout

Most Dubai IPOs have attracted a lot of demand this year as the city’s benchmark index was the world’s fourth-biggest gainer before oil slumped on Nov. 28, Yahya said. Dubai’s measure, which had gained about 33 percent, lost 10 percent in less than two weeks since the oil rout rattled regional markets.

Dubai Parks & Resorts was set up by Meraas Holding LLC, a state-owned Dubai company, to build the theme parks. Trading in the company’s shares is due to start on Dec. 10 on the Dubai Financial Market. Shares were sold at 1.01 dirhams each in the IPO. Institutional investors were allocated 60 percent of the offering.

Last month, Dubai Parks & Resorts arranged a 4.2 billion-dirham syndicated loan to help fund the development of the theme parks. Meanwhile, Meraas has agreed to fund any cost overruns.

To contact the reporter on this story: Zainab Fattah in Dubai atzfattah@bloomberg.net

To contact the editors responsible for this story: Andrew Blackman atablackman@bloomberg.net Dale Crofts.

Source: bloomberg