Limited liquidity has again led to a sharp rise in the share price of a small company that has recently floated. The standard list shell MENA-Land (LON:MENA) share price has risen by 30% to 130p (bid/offer spread of 125p/135p) on no reported trades.

MENA is seeking to acquire property development assets in the UAE. The company is controlled by the Alhammadi family, which has interests in property and infrastructure projects in the UAE.

Management believes that this is a good time to become involved in property in the UAE because oil prices have improved, and this should help to accelerate economic growth. The property market remains soft following the oil price slump but there is demand for good quality sites. There are opportunities in warehousing and hotels.

Chinese buyers have been acquiring property assets in the UAE and Chinese financial institutions are backing development projects.

Investors are buying 71p a share of cash plus the expertise of the board and the Alhammadi family for 130p a share. That is more than high enough until there is more news about the assets that are going to be acquired.

==========

MENA-Land (MENA)

www.mena-land.com

Middle East property investment shell

==========

Standard listing

Flotation date:  11 April 2019 

Issue price: 100p

Amount raised: £1m

Expenses: £290,000

Market capitalisation: £1m

Brokers:  

==========

What does it do?

Eastleigh-based MENA has been set up to acquire property in the UAE. Economic growth and rising population mean that demand for property is strong.

The focus is existing developments and land for development in areas where foreign investment in freeholds is allowed. Foreigners can only own property in designated areas where, in the case of Dubai, no tax is payable. This will initially be in Dubai and then expand into other parts of the UAE – which is made up of seven emirates.

The strategy is to have income generating assets that provide capital growth prospects.

If an acquisition is not made within three years, then shareholders will be given the chance to vote on the winding up of the company and the return of the remaining cash to them.

Financials

There is £710,000 in the bank following the flotation. Directors’ salaries and admin expenses will take up £87,500, due diligence costs £135,000 and financial, legal and surveying costs £350,000. The rest will provide working capital.

The first acquisition is likely to require a further fundraising plus borrowings.

Directors

Philip Chamberlain is a member of the Royal Institution of Chartered Surveyors and is an authorised person via the Saudi Arabian Monetary Authority. He has worked in the property sector for more than two decades.

Annual salary: £25,000 – this will be reviewed after the first acquisition is completed

John-Paul Etheridge has financial, tax and mergers experience in the oil, aviation and commercial property sectors. He has more than a decade of experience working with smaller companies in the Middle East and Australasia.

Annual salary: £25,000 – this will be reviewed after the first acquisition is completed

Shareholders

The directors do not own any shares. ME Land Company, where Mr Alhammadi is the beneficial owner, owns 70%. The Alhammadi family has interests in property and infrastructure projects in the UAE. There is a relationship agreement between MENA ME Land and Mr Alhammadi that is designed to ensure that the company is operated independently.