IPO: Dubai to sell 20% stake of road-toll operator Salik

Dubai’s toll gate operator Salik Company, has announced its intent to proceed with an initial public offering (IPO) and list its ordinary shares on the Dubai Financial Market (DFM).

The offering will consist of 1.5 billion shares at a nominal value of Dhs0.01, representing 20 per cent of Salik’s total issued share capital.

The offering comprises individual subscribers making up the first tranche, while professional investors and eligible employees will form the second and third tranche, respectively.

The subscription period will open on September 13, 2022 and is expected to close a week later on September 20, for UAE retail investors and a day later for qualified investors. Meanwhile, the Dubai government reserves the right to amend the size of the offering at any time prior to the end of the subscription period, a statement said.

As part of the qualified investor offering, 5 per cent each of the offering will be reserved for offer to the Emirates Investment Authority and to the Pensions and Social Security Fund of Local Military Personnel.

Following the offering, the company intends to pay dividends in April and October of each fiscal year. It expects to pay a first dividend for the second half of 2022 by April 2023, and to pay 100 per cent of the net profit, after keeping aside the statutory reserves required by law. From 2023 onwards, the company expects to pay 100 per cent of the net profit available for distribution as dividend, the statement added.

Mattar Al Tayer, chairman of Salik’s board of directors, said that “Salik has played a pivotal role in managing traffic in Dubai for 15 years and will continue to remain at the heart of expansion plans in the road and transport sector, in support of the emirate’s economy.”

Moelis & Company UK DIFC Branch has been appointed as the independent financial advisor and Emirates NBD Capital has been appointed as financial advisor to Salik. Emirates NBD Capital, Goldman Sachs International, and Merrill Lynch International have been appointed as joint global coordinators and joint bookrunners.

Citigroup Global Markets Limited, EFG Hermes UAE Limited (acting jointly with EFG Hermes UAE LLC), and HSBC Bank Middle East Limited have been appointed as joint bookrunners.

In June this year, Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, issued Law No. (12) of 2022 to establish road toll operator Salik as a public joint stock company.

Read: Sheikh Mohammed issues law establishing Salik as public joint stock company

Salik’s IPO will test investor appetite after the summer in the Gulf, which saw record listing proceeds in the first half. But the elevated oil prices and equity inflows that buoyed regional markets have since come under pressure from concerns about a possible recession. The deal is part of wider plans to list 10 state-owned firms.

Arabic for open, Salik is an automated system introduced in 2007. Each time a vehicle passes through one of the city’s toll points, Dhs4 ($1.09) are charged to a prepaid account, eliminating the need for cash or toll booths.

With inputs from Bloomberg