Dubai Taxi IPO price range values company at up to $1.25 bln; strong demand expected

Vijay Valecha, Special to the Reuters Nov 21, 2023

DUBAI, Nov 21 (Reuters) - Dubai Taxi Company (DTC) on Tuesday kicked off the subscription period for its upcoming initial public offering (IPO), which could raise up to around $316 million, with investors expecting healthy demand for the share sale amid a strong regional economic outlook.

After a slow third quarter, DTC's IPO will be a test for a strong pipeline of planned regional listings in the fourth quarter and into 2024 amid the Israel-Hamas conflict, which has unsettled markets.

Government-owned DTC - which plans to offer a 25% stake through the IPO - set a price range of between 1.80 dirhams and 1.85 dirhams per share, implying a market capitalisation at listing of 4.5 billion dirhams to 4.6 billion dirhams ($1.25 billion).

The total offering size is expected to be between 1.13 billion dirhams ($307.67 million) to 1.16 billion ($315.84 million), a company statement said.

"From an investor's perspective, the price range for the IPO presents an enticing opportunity ... The IPO has already generated remarkable interest, and the overwhelming response has raised the possibility of upsizing the offer,"saidVijay Valecha chief investment officer at Century Financial.

"Despite geopolitical factors, investor appetite for Dubai and regional IPOs remains strong. The combination of a strong dividend policy and Dubai's growth story appears to outweigh concerns related to geopolitical factors."

Government-owned DTC is the latest public share sale from Dubai as part of a broader privatisation programme to list 10 state-linked companies to boost stock market activity, repay debt and deepen capital markets.

Dubai's economy expanded 4.4% in 2022, boosted by a property boom which has sent prices soaring, and a sharp rebound in travel and tourism after the Covid-19 pandemic, although its focus on services-oriented sectors makes it more vulnerable to global shocks.

DTC's final offer price is expected to be announced on Nov. 30. Shares are scheduled to begin trading on the Dubai Financial Market on Dec. 7, subject to regulatory approvals.

The company has appointed Citigroup Global Markets Limited, Emirates NBD Capital, and Merrill Lynch International as joint global coordinators and bookrunners, and EFG Hermes UAE and First Abu Dhabi Bank as joint bookrunners on the deal.

Source:

Reuters