Dubai: As Marka, a newly formed public joint stock company that is yet to start its operations in the targeted retail and food and beverages sectors, goes to the stock market Sunday with its IPO to raise Dh275 million, it sees rising rents as a risk amid a strong growth in the real estate sector.
According to Mahdi Mattar, chief executive of CAPM Investment, the lead adviser to Marka, higher inflation is a risk that they have identified, which will “definitely affect our operating expense”.
“But we can take part of this to our pricing points, so we can move it away and shield the company from it,” Mattar said during a media roundtable in Dubai on Wednesday. “It is a risk but it’s not a major risk because you can always adjust your prices according to rents.”
The strategy to tackle higher rents in the existing prime malls, which also have a waiting list, will also be addressed by plans to take their stores to different locations and opting for new malls.
Khalid Al Mheiri, deputy chairman of the Marka Founders Committee, said the sites chosen for their restaurants and cafes will be mix of outside and inside spaces.
He added that as new retail developments are announced, “you will see us making announcements with those developers taking a significant space.”
Much on the lines of some of the existing retail groups of the UAE, the company also plans to offer well know international—mostly western—brands to the customers, majority of which it thinks will be tourists visiting the UAE.
UAE’s tourism numbers have been seen record growth and rising, and with Dubai Airport surpassing Heathrow in international passenger numbers in the first two months of the year, the Founders Committee members are confident that it will benefit from the continuing trend. It has already signed agreements with more than five each of fashion labels and restaurants respectively, all western.
For the first year, Marka is aiming to open at least five stores on the fashion side and six in the food and beverages sector. In five years, as they plan to progressively roll out their plans in the UAE and then into the region, they are looking at 100 stores and restaurants.
According to the lead adviser CAPM Investment, the capital raised from the IPO would be used for the capital and operations expenditures, with 50 per cent allocated for retail and 50 per cent for the opening of restaurants and cafes.
“This doesn’t mean that in the future if the management and the board decide that there’s an opportunity to take leverage, then they will do it,” said Mattar.
“In our analysis, we were as conservative as possible, and will use only the capital [raised for the capital and operations expenses] and there won’t be any leverage initially.”
The company is expecting the IPO on DUbai Financial Market (DFM) to enjoy a big turnout for being the first company in five years to come to the local market and also, being the first in the retail sector to be listed.
“The feedback we got from the market is that because we are the first company to have an IPO after so many years, and we are doing something special in the market, we will be different for the people who will buy the 275 million shares,” said Jamal Al Hai, chairman of the Marka Founders Committee.
Fifty-five per cent of Marka shares are for public subscription, of which 51 per cent is open to GCC investors and remaining to the rest of the world. The shares will be offered at par, that is at a price of Dh1 per share plus a premium of 3 fils a share. Marka’s founders’ equity subscription has mounted to Dh225 million. It has 151 founders belonging to 12 nationalities.
