Dubai Taxi IPO: Company aims to raise $315m through DFM listing

The price range for the public offering, which begins on Tuesday, has been set between Dh1.80 and Dh1.85 per share

Dubai Taxi Company was founded in 1995 and has a fleet of about 7,000 vehicles that service the emirate's growing population. Reuters

Shareholders in Dubai Taxi Company are looking to raise as much as Dh1.16 billion ($315 million) through its listing on the Dubai Financial Market as part of the emirate’s push to broaden its capital markets.

The company is selling 624.75 million shares, equivalent to 24.99 per cent of the DTC’s total issued share capital in an initial public offering, it said on Tuesday.

The price range for the public float has been set between Dh1.80 and Dh1.85 per share. The company expects to announce the final offer price on November 30.

The indicative price band values the company between Dh4.5 billion and Dh4.6 billion at the time of listing.

It is expected to start trading on the DFM on December 7, the company said.

“We have seen strong interest in the IPO since announcing our intention to float last week, reflecting DTC’s compelling investment story which combines strong market fundamentals and an attractive growth opportunity,” Mansoor R Alfalasi, chief executive of DTC, said.

“DTC is at the heart of Dubai’s mobility vision, with the IPO the next important chapter in our journey.”

The subscription period for retail and institutional investors began on Tuesday. Retail investors' tranche is set to close to on November 28, while the subscription period for qualified institutional investors for the deal will end on November 29.

As part of the offering, 5 per cent will be allocated in the first tranche and 95 per cent in the second, the company said on November 13 when it announced the intention to float its shares.

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

The Department of Finance, representing the government of Dubai, will retain the remaining 75.01 per cent shareholding and can modify the size of the offering.

Dubai announced plans in November 2021 to list 10 state-owned companies to increase the size of its financial market to Dh3 trillion ($816.8 billion), as well as set up a Dh2 billion marketmaker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.

Four of the announced 10 state-owned enterprises listed on the DFM last year.

The listing of Dubai Electricity and Water Authority was the largest GCC IPO last year, raising $6.1 billion.

Dewa's offering size more than doubled to 8.5 billion shares amid strong investor demand.

State-owned Tecom, Salik and Empower collectively raised $2.2 billion in June, September and November 2022, respectively.

Overall, Middle East IPOs raised more than $23 billion in 2022 from 48 listings, compared with $7.52 billion from 20 offerings in the previous year, according to global consultancy EY.

That was the highest share for the Gulf region after 2019, when Saudi Aramco went public in a $29 billion offering, the world’s largest.

Dubai Taxi Company was founded in 1995 and has a fleet of about 7,000 vehicles that service Dubai's growing population. It is the biggest taxi operator in the emirate and currently holds about 44 per cent market share.

The number of people living in the emirate hit 3.61 million in April 2022, and the population is expected to rise to 5.8 million by 2040.

In the 12 months to June 30, 2023, DTC taxis and limousines made 44 million trips, 42 million of which were taxi trips, the company said.

For the fourth quarter, DTC expects to distribute a first dividend of at least Dh71 million to be paid in April 2024, it said in the prospectus released earlier this month.

Starting from the fiscal year 2024, the company intends to pay dividends twice each year, in April and October.

As part of its dividend policy, an earnings-linked framework with a minimum of 85 per cent of annual net profit will be made available for distribution.

"The dividend policy is designed to reflect the company's expectation of strong cash flows and expected long-term earnings potential, while allowing the company to retain sufficient capital to fund ongoing operating requirements and continued investment for long-term growth," the company said.

Emirates NBD Capital, First Abu Dhabi Bank and EFG Hermes UAE have been appointed as the joint lead managers for the IPO.

The lead receiving bank is Emirates NBD.