In a remarkable display of investor confidence, Dubai Taxi Co.’s initial public offering (IPO), valued at up to 1.16 billion dirhams ($315 million), achieved full subscription within the first hour of its launch. This enthusiastic reception underscores a robust demand for shares in what is Dubai’s first major privatization initiative in over a year.
According to Bloomberg, the offering encompasses the sale of 624.75 million shares, representing a 25% stake in the company. These shares are priced between 1.8 dirhams and 1.85 dirhams each, positioning Dubai Taxi’s valuation at around 4.62 billion dirhams. This development was officially announced on Tuesday.
Investors have until November 29 to place their orders, with the final offer price scheduled to be revealed on November 30. Trading of the shares is expected to commence on December 7.
This IPO marks a significant moment for Dubai’s government, as it is the first share sale conducted in more than a year. The previous year witnessed the government raising $8.3 billion through the sale of stakes in four state-owned entities, including the primary water and electricity utility of the city. This ongoing series of share sales is part of a strategic plan initiated about two years ago, aiming to list 10 state-owned companies. The objective is to rejuvenate trading volumes in Dubai and align with similar initiatives in Abu Dhabi and Riyadh.
2023 has seen only one other IPO in Dubai prior to this. Al Ansari Financial Services PJSC, a family-owned money exchange firm, raised $210 million in March, marking one of the first private firms to list in the United Arab Emirates.
Dubai Taxi joins the ranks of several other UAE companies gearing up for public listings. In Abu Dhabi, PureHealth Holding PJSC and Phoenix Group Plc are also preparing for their respective IPOs. PureHealth, a health-care platform, is controlled by one of Abu Dhabi’s sovereign wealth funds and its largest conglomerate. Phoenix Group, a cryptocurrency mining hardware retailer, recently initiated orders for its $371 million listing.
As Dubai’s largest taxi operator, holding a 44% market share, Dubai Taxi Co. stands to benefit significantly from the city’s growing appeal as a post-Covid haven. An increase in the population, partly due to an influx of crypto millionaires and Russian nationals since the Ukraine conflict, has bolstered Dubai’s economic prospects. The UAE has plans to attract millions more in the coming decades.
Dubai Taxi is set to pay a fourth-quarter dividend of at least 71 million dirhams in April, and from the fiscal year 2024, it plans to distribute at least 85% of its annual net profit in two dividend payments. The IPO is being coordinated by Citigroup Inc., Emirates NBD Capital, and Bank of America Corp., with Rothschild & Co. serving as the independent financial adviser.