Saudi Arabia's Best 2017 Performer Plans Unit IPO by End of Year

(Bloomberg) -- Dar Al Arkan Real Estate Development, the biggest stock winner of 2017 in Saudi Arabia, expects to conclude the initial public offering of its property unit before the end of this year, according to Chief Executive Officer Ziad El Chaar.

The process is still in “very early stages,” Chaar said in a telephone interview on Thursday. The preliminary valuation of the asset portfolio owned by the unit is about 2.7 billion riyals ($720 million), he said. The company could raise about 810 million riyals if it sells an intended 30 percent stake in the subsidiary, which owns projects in Saudi cities including Mecca, Medina, Jeddah and Riyadh. 

Dar Al Arkan shares more than doubled in 2017, the biggest gain among members in the Tadawul All Share Index. The shares have fallen 27 percent this week as investors booked profits.

The Saudi Arabian developer's plan to offer shares comes on the heels of the United Arab Emirates' biggest IPO last year, when Dubai-based Emaar Properties raised about $1.3 billion from the sale of a stake in its U.A.E. real-estate unit. Dar Al Arkan announced at the end of last year that its board approved the IPO. Samba Capital & Investment Management Co. is the financial adviser.

“Every time we have a new project, we could potentially include it,” in the portfolio of the unit, El Chaar said. The land development and real estate development segments of the parent company are not included in unit to be offered, he added.

Dar Al Arkan, which is aiming to expand beyond Saudi Arabia's market, reported an 86 percent jump in third-quarter profit on the back of higher property sales.

To contact the reporter on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net.

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Namitha Jagadeesh

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