Helping Saudi homegrown brands list in London

The $72m IPO aims to help Dar Global become a top 50 global developer.

Dar Global, the luxury international real estate developer, started trading on the London Stock Exchange (LSE) on February 28, and became one of the first Saudi homegrown brands to list on the LSE’s main market.

Ziad El Chaar, CEO of Dar Global, says: “We have seen a lot of encouragement from the Ministry of Investment in Saudi Arabia to spread brands overseas. Our initial public offering (IPO) definitely created a lot of news … so many more companies may consider this route.”

Dar Global was established as the international development subsidiary of the Dar Al Arkan Real Estate Development Company, which listed on the Saudi Stock Exchange in 2007. The restructuring process to set up a separate company took almost 10 months. However, Mr El Chaar says preparing for the transaction was a straightforward process as the parent company is already public and has a high degree of governance.

Dar Global aspires to become a top-50 developer globally, outside China, and therefore desired to go public on one of the biggest international stock markets. As Mr El Chaar explains, Dar Global wanted the high profile of a London listing and to be subject to English law, which encourages future investment and growth in one of the biggest international property markets.

“We understand the value of joint ventures to expand internationally, and they need development agreements under international laws and a structure that facilitates institutional funding,” he says.

Being a young company, Dar Global chose a private placement and a direct listing that allowed its parent to sell shares, rather than having to issue new stock as in a traditional IPO. The transaction raised $72m in gross proceeds at the placement price of $3.33 per share, valuing Dar Global at around $600m, with Liberum Capital acting as capital markets adviser.

“We chose Liberum as they are one of the best investment banks in the mid-cap space,” Mr El Chaar adds. “The structure provides opportunity for growth as it will allow us to do more transactions and provide a better funding structure.”

I am hoping that once we have stable growth, our mother company will consider selling a bigger portion of Dar Global.

Dar Al Arkan still owns 88% of Dar Global and the timeline for selling more shares will be dictated by the market and the success of acquisitions, especially projects in the UK.

“Our target is to grow the business and we are currently evaluating a large number of transactions in the pipeline,” he continues. “I am hoping that once we have stable growth, our mother company will consider selling a bigger portion of Dar Global.”

The rationale for spinning off Dar Global was that real estate is a very local business from a first homes perspective, and few developers have succeeded in developing properties outside their home country.

According to Mr El Chaar, “Dar Global is a unique real estate development company that was built to satisfy global demand for second homes and vacation homes.”

The company began by expanding in Dubai, Muscat and Doha, and now has more than 40 nationalities investing and vacationing internationally. Mr El Chaar argues that another big differentiator for Dar Global is its partnerships with luxury brands, such as Missoni and Versace, and the presentation of limited editions to target the affluent.

For example, in June 2023 Dar Global launched its first project in continental Europe, Tierra Viva in Marbella, in partnership with Lamborghini, which was the luxury car brand’s first residential project on its home continent.

The increase in interest rates and inflation need not affect Dar Global’s strategy, argues Mr El Chaar, as the firm predominantly focuses on second homes for internationally mobile and wealthy customers.

“We have not seen a slowdown in demand because non-residents do not require a mortgage for their second homes and vacation homes, and our market is mainly for the affluent who are not affected as much by the current environment,” adds Mr El Chaar.

For the first six months of 2023, Dar Global reported a pre-tax profit of $20.8m. Off-plan sales in Dar Global’s largest active project, AIDA, started in the second quarter of 2023 and resulted in sales of 115 units in the first three months.

Dar Global also intends to expand in hospitality by acquiring or building hotels, and selling them after three to five years. The firm is thus building a war chest of funding for acquisitions as it expected a rise in interest rates and inflation. In April, Dar Global made its debut in the hospitality industry in the Maldives in partnership with Dolce & Gabbana.  


Source: The Banker, by Shanny Basar, January 1, Helping Saudi homegrown brands list in London