IPO hits over-subscription mark in 60 minutes, bankers say
Dubai: With sizeable investor interest having already built up for the IPO, Dubai Taxi Company has set a price range of Dh1.8 to Dh1.85 a share, with subscription opening today (November 21).
Dubai Taxi is floating 24.99 per cent of its equity, and the final offer price is to be announced November 30.
The Dh1.8-Dh1.85 a share range sets DTC up to raise between Dh1.12 billion to Dh1.16 billion. And it also implies DTC having a valuation of Dh4.5 billion to Dh4.62 billion.
The issue was over-subscribed within the first hour itself, according to traders.
The listing on DFM is set for December 7.
For Dubai Taxi IPO, retail investors tap banks for loans from ‘Dh50,000 to millions’ of dirhams
“We are delighted to open the subscription period for the Dubai Taxi Company IPO to all professional investors and retail investors in the UAE,” said Mansoor Alfalasi, CEO of Dubai Taxi Company.
“We have seen strong interest in the IPO since announcing our intention to float last week, reflecting DTC’s compelling investment story which combines strong market fundamentals and an attractive growth opportunity powered by our fleet of over 7,000 vehicles, including more than 5,200 ‘red-roof’ taxis, and a robust financial profile with consistent topline growth and margin expansion.”
DTC is at the heart of Dubai’s mobility vision, with the IPO the next important chapter in our journey
– Mansoor Alfalasi of Dubai Taxi Company
The company had earlier announced that it will be issuing a dividend of Dh71 million in April 2024, which will be the payout for its Q4-2023 operations. Thereafter, annual dividends will be equal to a minimum of 85 per cent of the net profit.
“The DTC IPO – and the demand that we have already witnessed for it – highlights the continuing successful privatization drive in the UAE,” said Sameer Lakhani, Managing Director of Global Capital Partners. “The enthusiasm of local, regional and international investors to participate in the vibrancy of the capital markets.
“Given RTA’s success with Salik – whose stock has been up more than 57 per cent since its DFM listing – investors are looking forward to the near perfect combination of a strong dividend policy and the growth of Dubai.” (The Salik IPO price was set at Dh2 a share.)
HOW’S DUBAI TAXI DOING?
In the nine months to September, DTC’s net profit was Dh267 million (against Dh134 million a year ago) from Dh1.41 billion (Dh1.27 billion in 9M-22).
The proceeds from the IPO will help with fleet expansion and consolidate the market leader status in the emirate.
The dividend yield would work to around the 5 per cent mark.
Instant sellout
That the IPO will be an instant sellout will surprise no one – the detail that retail investors are looking out for will be whether there will be upsizing of the offer. Analysts have suggested that it could be a ‘live possibility’ given the level of interest that is there from investors big and small.
Banks have been flooded with lending requests from investors wanting to be part of the IPO. Each subscriber will get a minimum of 2,000 shares. But that won’t be anywhere near enough to whet the appetite.
The DFM general index has been on a tear all through this year, and recent weeks have shown that investors haven’ turned skittish over the extreme situation in the wider Middle East region.
In Abu Dhabi, PureHealth – the UAE’s biggest healthcare entity – has announced it would be going public in December, and that’s going to be a blockbuster IPO any which way one looks at it.
Will there be time for another IPO in the UAE? Even without one, the Dubai Taxi Company and PureHealth issues will have generated enough buzz to close off 2023 on a high for the UAE stock markets…
