Dubai’s Salik IPO kicks off, aims to raise $800 mn

After the offering, Dubai government will retain 80% of the company

A Salik toll gate is seen on Al Garhoud bridge in Dubai (Image credit: Reuters)

Published: Tue 13 Sep 2022, 12:07 PM

Dubai road-toll operator Salik will launch today its initial public offering (IPO) in preparation for the listing of its ordinary shares for trading on the Dubai Financial Market (DFM). Salik will be the fourth company after the Dubai Electricity and Water Authority (Dewa), Tecom Group, and Etihad co-op to list shares on the DFM.

The offering process, as it became known, is divided into three tranches: the first for individual subscribers, the second for professional investors, and the third for qualified employees. It is set to expire for individual investors on September 20 and for qualified investors on September 21.

As part of its efforts to expand the size of Dubai’s capital markets, the Dubai government is selling 1.5 billion shares or 20 percent of its stake in the company. This stake is expected to generate 3 billion dirhams ($817 million).

After the offering, the government will retain 80 percent of the company, which is expected to be listed on the DFM on September 29.

According to Gulf News, the company agreed on a final per-share price of 2 dirhams. It also decided to announce the final offer price, instead of a price range, at the start of the subscription period.

The price implies a total valuation of Dubai’s exclusive toll gate operator at 15 billion dirhams.

Salik’s IPO has received commitments from ‘cornerstone’ investors totaling up to 606 million dirhams. These investors are UAE Strategic Investment Fund (through Emirates NBD AM SPC), Dubai Holding, Shamal Holding, and The Abu Dhabi Pension Fund.

Salik was first introduced in 2007 and currently has 3.6 million vehicles registered in the toll system.

In an earlier interview, the company’s CEO, Ibrahim Al-Haddad, stated, “Salik held a series of meetings with investors prior to the IPO while confirming the interest in the offering and the investors’ expectations.”

Salik is a high-quality asset,” Al-Haddad added, “and the impressions we received from investors confirm this fact, allowing us to be very selective when it comes to the strategic investors we want to bring in.”

As part of a government initiative to list 10 state-linked companies, Salik is the latest state-controlled company to announce the sale of shares in a public offering.

In April, DEWA raised $6.1 billion in its IPO, the largest in the region since Saudi Arabia’s record IPO in 2019.

Salik anticipates paying its first dividend in April 2023 for the second half of 2022. It intends to pay out 100 percent of the distributable net profit beginning in 2023.

In the first half of this year, Salik reported basic profits of 800 million dirhams ($217.82 million), compared to 637.41 million dirhams in the same period in 2021.

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