Shares of Tecom Group, the operator of business districts in Dubai, pared early gains to trade lower following the company's debut on the Dubai Financial Market on Tuesday.
Shares closed 8.61 per cent down at Dh2.44 on Tuesday, after rising by 1.12 per cent to Dh2.70 during early trade, compared with the listing price of Dh2.67. The company, trading under the symbol “TECOM” within the real estate sector, had a market capitalisation of Dh12.2 billion ($3.32bn).
Tecom raised Dh1.7bn from its initial public offering last month. The IPO was 21 times oversubscribed, with total gross demand at more than Dh35bn.
The UAE retail tranche of the deal was 40 times oversubscribed, making it the highest oversubscription multiple for listings on the DFM. The IPO drew "significant interest" from international investors and around 30 per cent of the qualified institutional offer was allotted to them, the company said.
“The listing of Tecom Group on the DFM is a "milestone event" for Dubai, Malek Al Malek, chairman of Tecom Group, said.
"As a publicly-traded company, Tecom Group will offer investors the opportunity to benefit from a central player in Dubai’s business hub proposition and from a company that is well-positioned to take advantage of Dubai’s market opportunities and its attractive underlying macroeconomy," he said.
"It will also help to further deepen Dubai’s growing capital markets," Mr Malek added.
Dubai Holding sold 625 million shares, or 12.5 per cent in Tecom, and will retain a stake of 86.5 per cent in the company.
The UAE Strategic Investment Fund and Shamal Holding are cornerstone investors in the IPO, with a total commitment of Dh283.75 million.
The emirate also unveiled plans to set up a Dh2bn market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.
The Dubai Electricity and Water Authority was the first government entity to list on the DFM in April. The utility, which listed shares in the largest public float in the Middle East and Europe since Saudi Aramco went public in 2019, raised Dh22.41bn from its IPO.
"Tecom Group’s successful public offering, as part of the government’s growth initiative, marks the second listing on the DFM within just three months," said Helal Al Marri, chairman of the DFM.
The move indicates "market participants’ deep confidence in DFM, which is clearly evident in the increased activity and improvement of numerous performance indicators recently", he said.
Tecom has a land bank of 375.3 hectares (40.4 million square feet) and access to additional land through an exclusive right of first offer with Dubai Holding Asset Management, which serves as a bedrock for future growth.
The group's 10 business districts are home to more than 7,800 companies. Nine of the districts are located in free zones that permit 100 per cent foreign ownership, with tenants including Meta, Google, Visa, BBC, CNN, Unilever and Dior.
The districts allow the complete repatriation of profits and employ more than 100,000 people in areas related to non-oil sectors that include technology, media, science, education, design and manufacturing.
Tecom has said it intends to pay dividends semi-annually — in October and April of each year, subject to the approval of its board and general assembly.
The company expects to pay a Dh800m dividend annually over the next three years through to October 2025, implying a yield of as much as 6.5 per cent.
Tecom recorded Dh485m in revenue for the first quarter of this year and Dh349m in earnings before interest, taxes, depreciation and amortisation (ebitda), with a 72 per cent ebitda margin.
“The listing of Tecom Group, which has an outstanding record in the developing and managing specialised business zones, reinforces DFM’s investment opportunities diversification strategy for the benefit of its large investor base of local and international investors as well as to reinforce market depth, liquidity and trading activities," said Hamed Ali, chief executive of DFM and Nasdaq Dubai.
"It also boosts our efforts to streamline companies’ access to DFM’s services that enable business owners to sell shares and provide an effective fund-raising platform, noting that our issuers have successfully raised Dh127bn through the market to implement their growth strategies."