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Eshraq has nerves of steel.

Summary: Kipp has suggested a simple motorcycle jump over the Atlantis arch, but Eshraq is considering something far more daring: an IPO. Can it be done?

As a child, Kipp loved daredevils. Evil Knievel was of course our hero, as he was for everyone of a certain age. We even had the little Evil Knievel action figure, complete with leaping motorcycle.

Since Knievel, no one has really captured the world's imagination in terms of dare-devilry. Sure we've had the odd wannabe, and a few showman magicians who've tried to create similar public spectacles. But frankly, the snooze-fest that is David Blaine sitting around is nothing compared to watching someone suicidally jumping a line of parked buses, is it? Our weekend afternoons have been sadly bereft of those low budget US TV shows featuring a borderline-insane misfit doing something monumentally stupid. We have been without a risk-loving bad boy.

Until now.

According to reports over the weekend, Eshraq, an Abu Dhabi-based developer, will in the coming weeks attempt the unthinkable. Equipped, no doubt, with crash helmet and fireproof overalls, the real estate company will launch an IPO.

According to the National, a source says Eshraq is planning to offer up to 55 percent of the company in public shares, possibly as early as next month.

Kipp will be mighty impressed if they go through with it. As we reported a few weeks back, Axiom were planning a welcome IPO -- the first for almost two years -- but ended up scrapping it because of a disappointing response from investors. At the time, analysts were divided on the reasons for the lack of interest. Axiom itself blamed poor market conditions, but some claimed that the company's plans for the money raised (mainly repaying debt) made the offering unattractive.

If Eshraq go through with it, it means they've judged that Axiom was flawed, rather than the market. If they're right, it could mean the market is stronger than many of us think. Right or wrong, this will be particularly gutsy from a real estate company, given the state of that industry.

According to the National, Eshraq has three projects in the early stages of development: Marina Rise, a group of residential and office towers on Reem Island; a mixed-use project called Gateway in Abu Dhabi; and Jumeirah Rise in Dubai.

So what are the company's chances of pulling it off? Chet Riley, an analyst with Nomura Securities, told the National that "In this market, for a UAE company without a strong prospectus and a growth story, it is going to be quite difficult. It will be pretty tough in this market to get away with a property IPO."

"Any IPO related to real estate would have to be offered at a significant discount" to the book value of the company, said Majed Azzam, an analyst with Alembic HC Securities.

Eshraq didn't provide comment for the story. Kipp can't help but feel that this news has been deliberately leaked so the company can gauge interest in a potential IPO; if that's the case, we're not sure what they'll gain from this as the reaction has been pretty predictable: doubtful caution for the most part.

One thing's for sure though: If the company goes through with it, it'll officially be our new hero.

2009 Dubai Business | Kippreport. All Rights Reserved.

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Date:Jan 9, 2011
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