Emaar Properties has reportedly hired DBS to advice on the sale of its majority stake in RSH Holdings, a Singapore-listed sports retailer, which has a current value of $164 million.
The Dubai-based real estate giant has declined to deny or confirm the reported development.
“RSH is a listed company on the Singapore Stock Exchange. Any information requiring public disclosure relating to RSH will be disclosed to SGX as and when appropriate,” said an Emaar spokesperson.
In July 2009, Emaar took full control of RSH after taking over the debt of its Indian joint venture partner.
According to one of the sources, DBS Bank, South East Asia’s largest bank in terms of assets, is advising Emaar.
RSH, which is working with brands including Mango and Zara, operates across the Middle East and Asia. Its shares are currently suspended, and last traded at S$0.66 on January 28.
The move of Emaar to look for potential buyers for its stakes in RSH is the latest in a series of similar steps taken by a Dubai-based entity to divest assets.
Istithmar PJSC, Dubai World’s investment arm, raised about $37 million by selling its entire 13.4 percent stake in SpiceJet Ltd, an Indian budget airline, as part of its parent’s strategy to sell stakes in companies worldwide to cut debt. Furthermore, Istithmar has reportedly launched marine services group Inchcape Shipping Services for sale for up to $700 million.
A unit of Dubai Holding, Dubai Group, which is considering selling its 40 percent share in Bank Islam, has appointed Rothschild to look for prospective buyers. Bank Islam is one of the leading Shariah-compliant banks in Malaysia.
Emaar has effective control of over 60 percent of the stakes in RSH. In the year to last March, RSH posted a S$773 million revenue and has a market capitalization amounting to S$250 million.
According to one of the sources, the sale was happening because the two partners refused to continue the retail business. “The competitive advantage of Emaar’s retail operations is the access to the company’s developments and thus real estate in prime locations,” said Roy Cherry, vice-president for research at Shuaa Capital.
“Emaar retail doesn’t need to own retail companies, its focus should be on partnerships within Emaar malls … this is a positive re-allocation of assets. Emaar would be exiting a non-core investment and boosting its cash buffer,” Cherry added.
According to the executives, Emaar, developer of one of the world’s biggest shopping malls and the world’s tallest tower, is turning to projects in Egypt, India and Saudi Arabia as it looks to boost revenue in the coming years. It posted a 53 percent increase in its Q3 net profit to Dh655 million, attributed mainly to higher sales of its high-end properties.
RSH, known as Royal Sporting House, is a retailer and distributor of golf, sports and fashion products.
In the last three decades, RSH has built a retail network comprising 570 ‘shops-in-shop’ and more than 430 free-standing stores in 12 countries. In 2007, the company was bought by Golden Ace — a joint venture between Indian real estate developer MGF and Emaar Properties.