Dubai’s Parkin IPO attracts $71bn, oversubscribed by 165x

March 14, 2024 (MLN): Dubai’s Parkin Company received $71 billion of orders for its $429 million Dubai initial public offering (IPO), underscoring the continued strong demand for share sales in the Persian Gulf, as Bloomberg reported.

The IPO of the city’s parking business was 165 times covered, according to a statement on Thursday.

The final price was set at 2.10 dirhams per share, the top of a marketed range, valuing Parkin at $1.7bn. The Dubai Investment Fund sold 749.7m shares, or a 25% stake, in the IPO.

Parkin is the latest Gulf listing to attract overwhelming levels of demand as investors bet on juicy dividends as well as on the strong share price performance of new companies.

Dubai’s last IPO, the $315m float of its taxi business, got $41bn worth of orders.

Governments in the Gulf, particularly the United Arab Emirates and Saudi Arabia, have embarked on a listing spree in the last few years to fund the diversification of their economies away from fossil fuels.

The IPOs have attracted strong demand amid a global listings slump due to rising interest rates, as high oil prices fueled local liquidity and international investors increasingly focused on the region.

Parkin’s IPO is the sixth privatization by the Dubai government as part of a plan, unveiled at the end of 2021, to list 10 state-owned companies to boost trading volumes and match similar drives in Abu Dhabi and Riyadh.

Parkin pitched its IPO as a bet on Dubai’s growing population thanks to expatriates moving from both Asia and Europe since Covid.

The emirate has sought to attract new arrivals with easier long-term residency rules and visas for freelancers and job seekers, while Russia’s invasion of Ukraine two years ago also caused an influx of people.

The company said it expects demand for public parking to grow by 60% by 2033.

Parkin plans to pay a minimum dividend of either 100% of profit or free cash flow to equity for the full 2024 fiscal year, depending on which is higher. Shares will start trading on March 21.

Emirates NBD Capital, Goldman Sachs Group Inc. and HSBC Holdings Plc are joint global coordinators for Parkin’s IPO, while Rothschild & Co. is an independent financial adviser.

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