Emirates NBD customers will be able to buy shares in the forthcoming initial public offering of Emaar Malls Group via the bank's ATMs, under a scheme prepared by the lender, Dubai's biggest.
The shares are scheduled to start trading on October 2, with an initial pricing range set for next week. Some 30 per cent of the issue is being reserved for small shareholders, with the balance for big financial institutions.
ENBD, one of the lead receiving banks for the offer, confirmed it is planning the initiative, in cooperation with the Dubai Financial Market, where the shares will be listed. Small investors have until September 24 to apply for shares.
To make a purchase on an ATM, a potential investor must have an account with the bank and hold a National Investor Number (NIN) card, which is issued by DFM.
A minimum investment of Dh10,000 is required and investors can increase the amount in multiples of Dh1,000.
"You put in your cash card, press the IPO option, and up comes Emaar Malls. Say how much you would like of the shares, by value, not number, and confirm your NIN. You just make a choice on the amount you want to invest,” said a spokesman for the bank.
"This hasn't been done anywhere else in the world as far as I know, but actually the technology is pretty simple,” he added.
Emaar is offering 1.9 billion shares in its malls business, to raise a minimum of Dh5.3 billion.
The price is currently being determined by a book-building process among global investing institutions. Emaar Properties, the owner of the malls business, is selling at least 15 per cent of its holding.
However, there is no guarantee investors will get the amount they ask for. Depending on demand for the shares, allocations can be scaled back according to the number of applications.
If the eventual allocation – to be decided in the three days before trading begins – falls below the Dh10,000 minimum application per individual, investors will be repaid the difference automatically via their ENBD accounts.
Retail investors will also be able to apply for shares in the run-up to the IPO via the DFM's iVestor card, which allows online purchase of shares and payment of dividends: and by the traditional route of brokers and in person at the official receiving banks.
In addition to ENBD, these are National Bank of Abu Dhabi, Mashreq, Dubai Islamic, FGB, Finance House and Union National.
DFM officials said the move was among the "game-changing initiatives” being planned ahead of a hectic few weeks in the U.A.E. financial markets. In addition to the malls IPO, the luxury property developer Damac is offering investors the chance to swap global depositary receipts (GDRs) listed in London for equity on the DFM.
Marka, the upmarket retail and leisure group, is also planning a DFM debut.
"We have been planning since 2010 to put the DFM on a par with any international stock market, and to provide the infrastructure and attraction for international investors and issuers,” said Fahima Al Bastaki, the head of business development at the DFM. "We have been low-profile, but now we are going high-profile.”
The DFM said it was necessary for the first time for any potential investor in the malls IPO to have a NIN on applying for shares. There are an estimated 900,000 retail investors in the U.A.E., the DFM said, of whom 450,000 have already been alerted by SMS text message, newspaper advertisement and other advertising, of the new regulation.
"An NIN number is mandatory in order to subscribe to Emaar,” Ms Al Bastaki said. She said the new rule on NIN would apply to all future IPOs. Making further share flotations available via ATMs was the responsibility of the banks.
"This is a logical extension of electronic trading and e-commerce. It will relieve bank branches of the responsibility of receiving application forms and other paperwork,” she added.
The Emaar IPO is the first time DFM investors have been able to take part in a share issue priced according to the book-building process. "It will set a trend, but may also present a learning curve,” she said.
Ms Al Bastaki said the DFM was considering whether to add a new retail sector to its index categories once Emaar Malls Group and Marka are listed.