Dubai: RTA's Salik to sell 1.5 billon shares in IPO

The road-toll operator is looking to raise around $1 billion for the shares



by

Waheed Abbas

Published: Mon 5 Sep 2022, 9:09 AM

Last updated: Tue 6 Sep 2022, 12:04 AM

Dubai’s road toll operator Salik will sell 1.5 billion shares or 20 per cent of the stake through the initial public offering (IPO).

Comprising individual subscribers, professional investors and eligible employees, the subscriptions will open on September 13 and end on September 20 for retail investors and till September 21 for qualified investors.

The company is likely to list on the Dubai Financial Market (DFM) around September 29.

In June, Salik was spun off into a public joint stock company and was given legal, financial and administrative autonomy to carry out its activities and achieve its objectives.

The Roads and Transport Authority (RTA), Dubai, was authorised to outsource all or part of Salik’s functions related to the operation and management of toll gates, as per the concession contract signed between RTA and Salik.

The RTA has allocated Dh5 billion in the Government of Dubai’s 2022-2024 budget to support the emirate’s infrastructure.

Dubai government had earlier announced that it would float 10 public entities and list them on the Dubai Financial Market in order to boost market capitalization of the market to Dh3 trillion. This will make the local bourse more competitive at the regional level and attract more foreign investment into the equity market.

This will be the third public offering by the public entity. In April, the Dubai Electricity and Water Authority (Dewa) was the first public entity to raise $6.1 billion in its IPO. In June, business park operator Tecom raised Dh1.7 billion through the IPO.

Salik said 1.5 billion shares will be made available each with a nominal value of Dh0.01 in the offering.

It added that the Government of Dubai, which will hold the remaining 80 per cent stake after the IPO, reserves the right to amend the size of the offering at any time prior to the end of the subscription.

Quoting sources, Reuters reported that the company is looking to raise around $1 billion (Dh3.67 billion) from the share sale, which implies a valuation of about $5 billion (Dh 18.35 billion).

The minimum application size for subscribers in the first tranche is Dh5,000 with an additional application in increments of Dh1,000. There is no maximum application size for subscribers in the first tranche. Each subscriber will have a guaranteed minimum allocation of 1,000 shares.

Dubai’s largest bank Emirates NBD will be the lead receiving bank for the IPO. Other banks are Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Ajman Bank, Commercial Bank of Dubai, Dubai Islamic Bank, Emirates Islamic Bank, First Abu Dhabi Bank, Mashreq Bank, MBank and Sharjah Islamic Bank.

Mattar Al Tayer, chairman of Salik, said the company is in a prime position to benefit from additional growth opportunities and is designed to ensure efficient operations.

Ibrahim Sultan Al Haddad, CEO of Salik, told newswires that the company is in talks with potential anchor investors.

Abdul Muhsen Kalabat, vice-chairman of Salik, said so far the response has been good from the retail and institutional investors. “Discussion happened with several categories of people and we’ve got positive feedback whether they are institutional or retail investors because Salik has a strong and stable financial statement. In terms of profits, Salik has seen an average of 5.5 per cent growth annually,” he said.

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The company said its future performance is expected to be driven by multiple layers of growth which represent an upside to the current business including the addition of new toll gates, advertising services both on toll gates and in-app ads, consulting services to governments looking to either implement toll gates or optimize existing operations.

Salik had 3.6 million registered cars at the end of April 30, 2022, with 1.8 million being Dubai vehicles.

It recorded Dh1.693 billion in revenues in 2021 and Dh944.9 million in the first half of 2022. It recorded 481 million total trips in 2021 and 267 million in H1 2022. While revenue-generating trips totalled 367 million in 2021 and 205 million H1 this year.


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