Shares of Salik, Dubai's toll operator, surged as much as 21 per cent as the company made its debut on the Dubai Financial Market on Thursday.
The company, which started trading under the ticker symbol “SALIK”, saw its shares jump to Dh2.41 in early trading on the DFM, giving it a market value of about Dh17.3 billion ($4.7bn).
Shares of the company settled 11 per cent above the listing price to Dh2.22 at the close of trading on Thursday.
Dubai's government sold more than 1.867 billion shares in the company, or 24.9 per cent, and had set its offering price at Dh2 a share, giving it an initial valuation of Dh15bn. The Dubai government retains 75.1 per cent of Salik’s existing share capital.
Salik raised Dh3.735 billion ($1.017bn) from its initial public offering this month and is the third listing in Dubai in 2022. The IPO was more than 49 times oversubscribed across all tranches, with total gross demand at Dh184.2bn.
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 the listing.
"The overwhelming demand that we witnessed for the IPO is testament to Salik’s robust business model, as well as the fundamentals underpinning Dubai’s capital markets," said Ibrahim Al Haddad, chief executive of Salik.
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.
Earlier this year, 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 is Dubai’s sole toll operator and currently has 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 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, 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.
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's revenue in the first half of 2022 increased 19 per cent to Dh944.9 million from the same period a year earlier.
Profit for the first six months of this year rose 26 per cent to Dh796.7m, from the same period a year ago.