Salik IPO: Dubai toll operator set to raise more than $1bn after boosting offering size

Emirate's government will now sell a 24.9% stake in the company due to strong investor demand

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  Vehicles pass under a toll gate on Sheikh Zayed Road in Dubai on Monday, September 5, 2022. Toll gate operator Salik is set to raise more than $1bn after it became the latest state-linked company to list. AP

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  Motorists are required to have a tag on the windscreen of their car and an online account to use the high-speed motorway. Victor Besa / The National

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  Drivers are charged Dh4 ($1.09) for each gate that they pass through. There are eight gates at present, but Salik's IPO prospectus says that more could be built. The National

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  Signs warn drivers that they need a tag on their vehicle to use this road. Jaime Puebla / The National

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  Ibrahim Al Haddad is the new chief executive of Salik. Photo: Salik

Dubai's government aims to raise Dh3.735 billion ($1.017bn) in toll operator Salik's initial public offering, after it increased the size of the stake it is selling in the company.

The emirate's government will now sell more than 1.867 billion shares in the company, or 24.9 per cent, up from the previously announced 1.5 billion shares, equivalent to 20 per cent, due to strong investor demand and oversubscription across all tranches, it said on Friday.

It will retain 75.1 per cent of Salik’s existing share capital and the company is expected to list on the Dubai Financial Market on September 29 under the symbol “SALIK” with a starting market capitalisation of Dh15bn.

Following approval from the UAE Securities and Commodities Authority, the first and third tranches for retail investors and eligible employees will increase to 145,725,000 ordinary shares, from 120,000,000. They represent about 7.8 per cent of the offer size.

The second tranche for qualified investors will increase to 1,721,775,000 ordinary shares, from 1,380,000,000. It accounts for about 92.2 per cent of the offering.

The subscription period remains unchanged and will close on September 20 for the first and third tranche offering, and on September 21 for second tranche.

The commitment of cornerstone investors remains unchanged at Dh606 million, representing 16.2 per cent of the new offer size.

They include UAE Strategic Investment Fund, Dubai Holding, Shamal Holding and the Abu Dhabi Pension Fund.

Sheikh Zayed Road in Dubai, one of the busiest in the UAE. AP Photo / Jon Gambrell

Salik's offering is part of Dubai's plans to list 10 state-owned companies to increase the size of its financial market to about Dh3 trillion.

The emirate also 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.

Salik is Dubai’s sole toll operator and currently operates eight toll gates that use radio frequency identification technology throughout the emirate, where more than 60 per cent of commuters use privately owned vehicles.

Salik’s net toll traffic from 2013 through to 2019 grew at a compound annual rate of 5.5 per cent, driven by Dubai’s expanding economy and population.

As of April 30, Salik had 3.6 million vehicles registered, out of which 1.8 million were Dubai vehicles.

Dubai, home to 3.5 million permanent residents and with a daytime population of 4.5 million as of December, forecasts that its population will grow by more than 70 per cent from 2020 to 2040. The emirate expects to host 25 million visitors by 2025.