Emaar may take full control of India joint venture

Emaar MGF needs to repay AED1.3b in loans but IPO reception is muted

Emaar MGF was fined $20m for the delayed handover of the Commonwealth Games Village last year. Photo: Getty
Emaar MGF was fined $20m for the delayed handover of the Commonwealth Games Village last year. Photo: Getty

RELATED ARTICLES: Court upholds $20m fine for Emaar India in CWG rowEmaar chief: Dubai will never stop taking riskEmaar moves to quash Delhi Games fallout

Emaar MGF, the joint venture between the Dubai real estate conglomerate and MGF Development, could come under Emaar’s full control if it fails to pay back AED1.3bn ($353.9m) in loans, analysts have said.

New Delhi-based Emaar MGF planned to raise $2.4b through an initial public offering to repay the loans, but appetite for the listing is muted, said Egypt’s HC Brokerage in a research note.

“Since the IPO is unlikely to go through soon, we believe that MGF will continue to be a drag on Emaar’s cash flows. Even at the latest reported implied IPO valuation of $2.4b [at a 30% premium to Emaar’s investment] appetite appears anaemic,” analysts said.

“Should the loans not be repaid, Emaar gains the right to increase its shareholding in MGF, which may bring it above 51% and result in full consolidation.”

In December 2010, Emaar MGF was fined $20m by a Delhi high court for the delayed handover of $230m Commonwealth Games Village.

The Delhi Development Authority, the state body overseeing the games, said that the 63.5 hectare village had numerous construction flaws and ran over deadline.

Analysts maintained a cautious view on Emaar Properties, which is forecast to cut its unit deliveries to the Dubai market by 44% in 2011 compared to the year earlier period, as a glut of new real estate comes online.

“We estimate a 41% year-on-year decline in revenue,” analysts said. “Dubai deliveries are winding down with construction significantly delayed.”

Most popular


Deadline approaches for CW Oman Awards 2020 in Muscat
You have until 20 January to submit your nominations for the ninth edition of the


CW In Focus | Inside the Leaders in KSA Awards 2019 in Riyadh
Meet the winners in all 10 categories and learn more about Vision 2030 in this
CW In Focus | Leaders in Construction Summit UAE 2019
A roundup of Construction Week's annual summit that was held in Dubai this September

Latest Issue

Construction Week - Issue 765
Jun 29, 2020