Dubai may increase the size of its road-toll operator’s initial public offering after stronger-than-expected demand, according to people with knowledge of the matter.
(Bloomberg) —
Dubai may increase the size of its road-toll operator’s initial public offering after stronger-than-expected demand, according to people with knowledge of the matter.
The government is considering whether to sell as many as 1.875 billion shares, or a 25% stake in the company, the people said, declining to be identified as the matter is not public. The initial plan was to offer a 20% holding.
Advisers on the $817 million deal recommended increasing the size after investors on Tuesday snapped up all of the shares on offer within hours of the IPO opening, the people said. A decision from the government may come as soon as Wednesday, one of the people said.
A representative for Salik said the company is evaluating its options and declined to comment further until a decision has been made.
High Stakes
The strong demand for Salik shows that appetite for Middle Eastern IPOs isn’t waning, despite a recent wobble amid economic challenges and weaker oil prices. The Dubai Electricity & Water Authority and Tecom Group listings posted lackluster performances after the region raised a record amount through IPOs in the first half of the year.
DEWA in April raised $6.1 billion after almost tripling the stake it sold to 18% after initially setting out to list 6.5%.
Salik, Arabic for open, is an automated system introduced in 2007. Each time a vehicle passes through one of the city’s eight toll points, 4 dirhams ($1.09) are charged to a prepaid account, eliminating the need for cash or toll booths.
Salik’s 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.
Bank of America Corp., Emirates NBD and Goldman Sachs Group Inc. are arranging the listing alongside Moelis & Co., the financial adviser for the IPO.
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