Dubai kickstarted its privatization program after a one-year hiatus with the planned initial public offering of its taxi business, as share sales gather pace in the United Arab Emirates in the final weeks of 2023.
The Dubai government will sell a 25% stake in Dubai Taxi Co. in the domestic listing, amounting to 624.75 million shares, according to a statement on Monday. The price range will be announced on Nov. 21 and the subscription period will end on Nov. 29 for institutional investors and a day earlier for retail buyers. The shares are expected to start trading on Dec. 7.
The IPO could raise about $300 million, Bloomberg News has reported.
Dubai Taxi’s IPO will be the first share sale by the government in more than 12 months, after it raised $8.3 billion selling stakes in four state-owned companies in 2022, including the city’s main water and electricity utility. The IPOs are part of a plan unveiled about two years ago to list 10 state-owned companies in a bid to boost flagging trading volumes and catch up with IPO drives in Abu Dhabi and Riyadh.
Dubai paused the listings this year, contributing to a drop in the overall IPO volumes in the Middle East. Such transactions have raised $7.9 billion so far in 2023, a 54% drop year-on-year, data compiled by Bloomberg show.
Still, the region is holding up as a bright spot for listings despite the war between Israel and Hamas and a gloomy environment for IPOs globally due to fears over high interest rates. The Oct. 7 attack by Hamas on Israel put investors on edge and caused a sharp drop in regional stocks, although many have since pared those losses.
Dubai’s benchmark index is the best performer in the Gulf this year, rising almost 19% partly thanks to a jump in property shares.
Population Increase
Dubai Taxi Co. is the largest taxi operator in the city by fleet, with a 44% market share, according to its website.
The company is expected to benefit from Dubai’s emergence as a post-Covid haven which has drawn expatriates to the emirate. An influx of crypto millionaires, bankers relocating from Asia and Russians since the start of war in Ukraine have also led to the city’s population increasing, with the UAE planning to attract millions more in the coming decades.
Other recent IPOs in the UAE include the $451 million listing of Investcorp Capital Plc, an investment vehicle backed by the Middle East’s biggest alternative asset manager, which was both upsized and priced at the top of the range. Phoenix Group, a cryptocurrency mining hardware retailer, announced its Abu Dhabi IPO of as much as $370 million on Friday.
Dubai’s Roads & Transport Authority is expected to sell shares in Dubai Parking next year after the taxi IPO, as it continues to monetize assets. Last year it raised $1 billion from the listing of road-toll operator Salik Co., which has been the best performer out of the city’s privatizations, with shares up 57% from the offer price.
Citigroup Inc., Emirates NBD Capital and Bank of America Corp. have been appointed as joint global coordinators on the Dubai Taxi IPO, while Rothschild & Co. is acting as independent financial advisor.
(Updates with more details from intention to float, background on Dubai stock market performance and population growth)
