Dubai toll operator Salik raised Dh3.735 billion ($1.017bn) from its initial public offering on the Dubai Financial Market, as part of a series of IPOs of state enterprises aimed at boosting the size of the emirate's capital market.
The IPO was more than 49 times oversubscribed across all tranches, with total gross demand at Dh184.2bn ($50.2bn). The company had set its offering price at Dh2 a share, giving it a valuation of Dh15bn.
The emirate's government sold 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.
The qualified investor tranche attracted Dh149.5bn of demand from across the globe and was oversubscribed by 52 times, excluding cornerstone investors.
The retail offering attracted more than Dh34.7bn from local investors, implying that it was 119 times oversubscribed.
The UAE Strategic Investment Fund, Dubai Holding, Shamal Holding and the Abu Dhabi Pension Fund are cornerstone investors in the IPO, with a total commitment of Dh606 million, representing 16.2 per cent of the offering. Cornerstone Investors’ shares are subject to a 180-day lock-up arrangement, following listing.
The Dubai government retains 75.1 per cent of Salik’s existing share capital and the company's shares will begin trading on the Dubai stock exchange on September 29 under the symbol “SALIK”.
The strong investor interest in the offering reflects the "'confidence” in Dubai’s capital markets and the strong position of Salik and its “robust business model, which will enable [it] to continue to remain at the heart of expansion plans in the road and transport sector, in support of the emirate’s economic growth”, said Salik chairman Mattar Al Tayer.
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.
“This listing is a key step in Dubai’s privatisation programme and its broader plans to attract foreign investment. Having kept Dubai moving for 15 years, Salik is at the heart of the city’s economic expansion plans,” said chief executive Ibrahim Al Haddad.
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.
The Dubai Water and Electricity Authority raised Dh22.41bn from its IPO, making it the largest public float in the Middle East and Europe since Saudi Aramco went public in 2019.
Salik expects to start paying dividends twice annually, in April and October of each fiscal year.
The company will pay a first dividend for the second half of 2022 by April 2023. It plans to pay 100 per cent of its net profit as dividends, after setting aside statutory reserves required by law.
Salik reported Dh944.9 million in revenue in the first half of 2022, up from Dh792.9m in the same period of 2021.
Profit for the first six months of this year rose to Dh796.7m, compared with Dh634.4m in the same period a year ago.