Dubai seeks to raise $817m from IPO of road-toll operator

Dubai is looking to raise $817m in the initial public offering of its road-toll collection system, the third listing in the emirate this year.

The city’s government is selling 1.5 billion shares, or a 20 per cent stake, in Salik at Dhs2 ($0.54) apiece, according to an advertisement in Dubai-based Gulf News.

Cornerstone investors – UAE Strategic Investment Fund, Dubai Holding, Shamal Holding and Abu Dhabi Pension Fund – have committed up to Dhs606m to the IPO.

The IPO is testing investor appetite at a delicate time for Middle East listings. After a record start this year, the market has started to wobble in the face of economic challenges and weaker oil prices.

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 reported.

Arabic for open, Salik is an automated system introduced in 2007. The firm is a critical asset – about 60 per cent 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 per cent.

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