Dubai to list 12.5% of Tecom through IPO on Dubai Financial Market

Dubai will list 12.5 per cent of the Tecom Group, the operator of business districts that are home to more than 7,800 companies, on the Dubai Financial Market as part of a series of initial public offerings of state enterprises aimed at boosting the size of the emirate's capital market.

Dubai Holding will sell 625 million shares in Tecom, which comprises 10 business districts that include Dubai Internet City, Dubai Media City and Dubai Design District, the company said on Thursday.

The price range for the listing will be announced on June 16, the same day when the IPO starts. The subscription period for the first tranche of retail investors and third tranche will run from June 16 to June 23.

The subscription period for the second tranche of qualified institutional investors will run from June 16 to June 24.

The Emirates Investment Authority is entitled to subscribe to up to 5 per cent of the offering, and the percentage of shares it purchases will be allocated in full before the commencement of allocation to any other subscribers.

The selling shareholder reserves the right to amend the offering and its size. The expected date of listing on the Dubai stock exchange is July 5.

“As Dubai Holding’s primary commercial development and leasing business, Tecom Group has helped execute our key role in diversifying Dubai’s economy and driving innovation and business growth and development,” said Amit Kaushal, Dubai Holding Group chief executive.

“We believe Tecom Group is ready to embark on a new chapter as a publicly listed company.”

The Dubai Electricity and Water Authority — which operates as a vertically integrated multi-utility, with business activities including electricity generation, transmission and distribution, water desalination and district cooling — was the first government entity to list on the DFM.

The utility, which listed shares in April in the largest public float in the Middle East and Europe since Saudi Aramco went public in 2019, raised Dh22.41 billion ($6.1bn) from its IPO.

Last year, Dubai announced plans to list 10 state-owned companies as part of its strategy to double the size of its capital market to Dh3 trillion and attract foreign investment.

The emirate also announced plans to set up a Dh2bn market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.

“For more than two decades … our company has succeeded in establishing a vibrant environment that enables existing and prospective customers to amplify their growth ambitions while evolving at pace with global industries and the future of the workplace,” said Malek Al Malek, chairman of Tecom.

“With our intention to list on [the] DFM, we are expanding our contribution to Dubai’s financial market and bolstering our vision to further unlock the emirate’s economic and business growth potential.

“The IPO offers investors a unique opportunity to be part owners of a company that is benefitting from Dubai’s attractive underlying macroeconomic, industry and business dynamics.”

Tecom said its current available land bank of 375.3 hectares (40.4 million square feet) and access to additional land through an exclusive right of first offer with Dubai Holding Asset Management serve as a bedrock for future growth.

Nine of Tecom's 10 business districts are located in free zones that permit 100 per cent foreign ownership, with tenants including Meta, Google, Visa, BBC, CNN, Unilever and Dior.

The districts allow the complete repatriation of profits and employ more than 100,000 people in areas related to non-oil sectors that include technology, media, science, education, design and manufacturing.

On Thursday, Dubai's purchasing manager's index showed that the emirate's non-oil business conditions hit a 35-month high, rising to to 55.7 in May, from 54.7 in April. This was the highest reading since June 2019.

Tecom said it intends to pay dividends semi-annually — in October and April of each year, subject to the approval of its board and general assembly.

The company expects to pay a dividend of Dh800 million annually over the next three years through to October 2025.

Tecom had about Dh1.77bn of revenue and Dh1.17bn in earnings before interest, taxes, depreciation and amortisation (ebitda) in 2021 with an 66.3 per cent ebitda margin.

The group recorded Dh485 million in revenue for the first quarter of this year and Dh349m in ebitda, with a 72 per cent ebitda margin.

The lead receiving bank is Emirates NBD. Other receiving banks include First Abu Dhabi Bank, Mashreq Bank, Emirates Islamic Bank, Dubai Islamic Bank, Ajman Bank, Commercial Bank of Dubai and Sharjah Islamic Bank.

Emirates NBD Capital, First Abu Dhabi Bank, Goldman Sachs, Morgan Stanley and UBS have been appointed as joint global co-ordinators and joint bookrunners.

Tecom Group operates the following business districts:

• Technology cluster: consists of Dubai Internet City and Dubai Outsource City.

• Media cluster: consists of Dubai Media City, Dubai Studio City and Dubai Production City.

• Education cluster: consists of Dubai International Academic City and the Dubai Knowledge Park.

• Science cluster: consists of Dubai Science Park.

• Design cluster: consists of Dubai Design District.

• Manufacturing cluster: consists of Dubai Industrial City.

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