UAE’s first IPO of 2024 catches a lot of heavy retail investor for secondary buying
Dubai: At its DFM listing, Parkin’s stock surged over 35.2 per cent to Dh2.84, representing another strong start for a Dubai government entity going public.
Parkin is coming off a record over subscription, including taking in 63,000 retail investors, many of whom being first time participants in a UAE IPO. The stock was priced at Dh2.1 for the IPO.
Market watchers say the stock will continue to see sizeable retail investor backing in the days ahead, as they try to build on what they have already received from the subscription process.
The Parkin’s pull on debut is also showing up in heavy trades at the other RTA (Road & Transport Authority) linked entities, Salik (which is 0.8 per cent up) and Dubai Taxi Co. (up 0.43 per cent) by the first 15 minutes from the opening.
In the IPO, Parkin – the first by a UAE entity in 2024 – had offered 24.99 per cent of its issued share capital by selling 749.7 million shares at Dh2.1 per share, for a market cap of Dh6.3 billion at the time of listing. The offering drew in Dh259 billion and raising gross proceeds of Dh1.6 billion.
It became the most oversubscribed offering on DFM, at approximately 165 times. “The resounding success of Parkin’s IPO underscores the unwavering confidence investors have in Dubai’s burgeoning market and Parkin’s strong position within it,” said Karim Galal, Managing Director of Investment Banking at EFG Hermes, which has been advisory to the stock float.
EFG Hermes on its own covered the subscription 44.3 times. “Recognizing the overwhelming demand from retail investors, the company responded by augmenting the retail tranche by around 20 per cent during the final stages of book-building,” said a statement issued by it.
‘Need to buy more’
“Parkin’s listing demonstrates the broadening and the confidence of the retail investor community,” said Sameer Lakhani, Managing Director of Global Capital Partners. “While it is never advisable to focus on initial day ‘pops’, the sheer level of demand for Parkin augurs well for both public and private sector IPOs, especially as more capital market reforms are on the anvil in UAE.”
Parkin, meanwhile, appointed xCube llc, as a liquidity provider for its shares. xCube will continuously provide bids and offers for investors to be able trade these shares with ease. “This will be achieved by reducing the bid-ask spread allowing for orderly trading and reduced volatility on the shares,” a statement said.
According to Mohamed Al Ali, CEO of Parkin, “This appointment (or xCube)represents a significant stride towards further strengthening investor confidence and enhancing our shares’ trading environment.”
Sameer Lakhani
The writer is Managing Director at Global Capital Markets.
