The toll-gate operator Salik will IPO 1.5 billion shares, or 20% of the equity capital, as Dubai gets ready for its upcoming significant IPO. Salik, which became a publicly traded joint stock company in June, manages 8 toll gates in Dubai and is moving in the same direction as DEWA and Tecom Group to become listed on DFM. (Each share is worth 1 filnominally).
Salik expects to generate significant growth in revenues as more vehicles pass through its toll gates. As of the end of April, it had 3.6 million registered vehicles, of which 1.8 million were vehicles registered in Dubai. More toll gates could be set up in the city – subject to approval from RTA.
The offer price will be confirmed on September 22, while the listing on Dubai Financial Market could be around September 29.
The Dubai Government, represented by the Department of Finance, will retain 80 percent post-IPO, at which point Salik’s paid-up capital will be Dh75 million, according to an announcement made via an ad.
The size of the IPO could be increased at any point prior to the end of the subscription period.
Individual subscribers, across nationalities, can participate in the IPO. Other investors – representing companies and establishments – too are eligible, and together they represent the ‘First Tranche’ with a minimum subscription amount of Dh5,000 and in multiples of Dh1,000 thereafter. There is no upper limit to what these individual investors can apply for.
The IPO offer period commences September 13, with the closing date for the first and third tranches will be September 20.
Closing date for the Second Tranche – meant for professional investors – will be September 21.
Allocation of shares for First and Third Tranche investors will be ‘no later than September 27’.
This is limited to ‘professional investors’ and they will have access to 1.38 billion of the offer shares. These investors could be international entities, including central banks or national monetary authorities, governments, financial institutions, etc. Licensed family offices with assets of Dh15 million and more too can participate. The minimum application in this tranche is from Dh1 million.
A Third Tranche is for eligible employees, and with a minimum subscription of Dh5,000. And 5 per cent of the shares will be allocated for EIA (Emirates Investment Authority).
Except for Aramex, transportation-associated entities do not make for a heavy representation on DFM. Salik’s entry would thus immediately expand the scope of the sub-index. “Salik would be comparable to Transurban, a toll operator listed in Australia,” said Sameer Lakhani, Managing Director at Global Capital Partners. “The company has performed well despite the headwinds in the global markets. The monetization of infrastructure assets is expected to accelerate throughout the world as investors look at more cashflow-generating entities.”
Salik had an EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) of Dh800.06 million in the first six months of 2022, as toll usage hit 267 million trips. That compares with Dh637.41 million and 227 million trips in the same period last year.
“Usage and numbers look good confirming more cars on the road, more economic activity happening in Dubai as part of the post-Covid surge the city has been experiencing,” said an analyst. “This is a steady business as far as investor possibilities are concerned. As with DEWA, Salik directly links itself to the wider Dubai economic buzz”.
The evaluation is accurate, and the data from 2020 will provide context on its own. EBITDA stood at Dh1.11 billion, a sharp decline from Dh1.65 billion the year before, while the total number of trips fell by 400 million from 571 million in 2019.
