Dubai’s $817 million toll operator Salik IPO covered within hours

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Investors snapped up all of the shares on offer in Dubai’s road-toll operator Salik within hours of the IPO opening, indicating that demand for Middle Eastern listings remains strong.

Dubai is looking to raise $817 million in the initial public offering of Salik, the third share sale in the emirate this year.

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The city’s government is selling 1.5 billion shares, or a 20 percent stake, at AED 2 ($0.54) apiece, giving the company an implied market capitalization of $4.1 billion.

Books were covered at the offer price on the full deal size on Tuesday, according to terms of the deal seen by Bloomberg News.

The IPO’s cornerstone investors -- UAE Strategic Investment Fund, Dubai Holding, Shamal Holding and Abu Dhabi Pension Fund -- have committed up to 606 million dirhams to the deal.

The IPO is testing investor appetite at a delicate time for Middle East listings.

After a record start this year, the market started to wobble in the face of economic challenges and weaker oil prices, with Dubai Electricity & Water Authority and Tecom Group posting lackluster performances in recent months.

Market Depth

Salik’s offering is part of a wider plan to list 10 state-owned firms to increase market depth. Emirates Central Cooling Systems could be next and appointed banks in August, Bloomberg News has reported.

Arabic for open, Salik is an automated system introduced in 2007. The firm is a critical asset -- about 60 percent of commuters in Dubai use private cars and net toll traffic from 2013 to 2019 grew at a compound annual growth rate of 5.5 percent.

Dubai has said it may consider introducing dynamic pricing at its road toll gates as a way to reduce congestion and boost revenue at Salik, which also plans to expand with more gates.

The institutional offering will end on September 21, while the book for retail buyers will close the day before, with the stock’s trading debut expected on the Dubai stock exchange on September 29.

Emirates NBD Bank, Goldman Sachs Group Inc. and Bank of America Corp. are the global coordinators, while Citigroup Inc., EFG-Hermes and HSBC Holdings Plc are the joint bookrunners on the offering. Emirates NBD and Moelis are the financial advisers.

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