for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

UPDATE 1-Egypt's Palm Hills Developments sets IPO range

(Adds details, analysts comment)

LONDON, April 17 (Reuters) - Egyptian property firm Palm Hills Developments said on Thursday it planned to raise up to $392 million in its initial public offering in Egypt and London.

The firm said it would sell up to 63.4 million shares or global depositary receipts (GDRs) in a global offering, with an over-allotment option of up to 9.5 million shares. There will also be a retail offering of 12.9 million shares in Egypt.

Palm Hills set an indicative price range of 19.25 to 25.00 Egyptian pounds per share and $17.72 to $23.01 per GDR, implying an offer size of between 1.6 billion and 2.1 billion Egyptian pounds or $302 million and $392 million, including the Egyptian retail offering and over-allotment shares.

The implied market capitalisation is between 9.0 billion and 11.6 billion Egyptian pounds or $1.7 billion and $2.1 billion.

Global property consultant CB Richard Ellis has given Palm Hills’ property portfolio a market value of $3.5 billion. The company’s land holdings comprise more than 38.9 million square metres, one of the largest land banks of any developer operating in the Egyptian real estate market.

PRICING

An institutional roadshow began on April 16 and pricing is expected to be set on or around 29 April, Palm Hills said.

EFG Hermes and Goldman Sachs International have been appointed joint global co-ordinators and bookrunners of the offer.

The company said it would use proceeds to fund existing and future development projects and expand its land bank, both in Egypt and abroad.

But London-based analysts expressed concerns that UK institutions would balk at the offer, pending a more convincing recovery in global real estate stock prices.

Following completion of the global offer, Egyptian retail offer and closed subscription, the company said it would have a freefloat of around 16.4 percent.

“It will be important to look at the shareholder list if this does make it to market,” one analyst said. “Goldman Sachs already have 5.5 percent [of the company] and have an option over another 4.5 percent,” he said.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up