The secondary share sale by Dubai telecom operator du will provide an opportunity for investors to further diversify into defensive stocks, while also boosting the company's free float level to 27.5 per cent, its chief financial officer has said.
Emirates Integrated Telecommunications Company, known as du, launched a secondary share sale offer on Monday that could raise up to Dh3.39 billion ($923 million), following the sale of 342 million shares by one of its main investors.
Mamoura Diversified Global Holding, a unit of Mubadala Investment Company, is selling 75 per cent of its stake in du, representing 7.55 per cent of du’s share capital.
A share sale in the telecom sector provides an attractive avenue for investors to diversify their portfolios, especially in the UAE, Kais Ben Hamida told The National in an interview on Thursday.
"Telecoms in the UAE is a very healthy sector, which is growing and with a good level of profitability. It is also a sector that is considered by many investors as a defensive sector," he said.
Defensive sectors are defined as those that provide dividends and earnings that are stable and consistent, regardless of the economic situation. They generally include utilities, consumer staples such as food and personal care, and health care.
"The transaction will increase the level of our free float to around 27.5 per cent. It will diversify the investor base and increase the liquidity of the stock, which has sometimes been a hurdle for the entry of many investors," Mr Ben Hamida added.
The price range for the secondary offering has been set between Dh9 and Dh9.90 per share, with the final offer price set to be announced on September 15. As of Thursday, the transaction is "triggering excellent feedback and a high level of traction", he said.
"We're in a macro environment that is very attractive to investors. We're talking about prospects for the UAE economy, whether it is related to the growing population, economy, controlled inflation, low interest rates and a very good foreign exchange environment," he added.
Inclusion in international indices, such as the MSCI, usually supports increased liquidity for a company’s shares and can help to attract more regional and global institutional investors.
"The transaction also provides a path towards inclusion in international indices – all of this will raise the profile of the company," Mr Ben Hamida added.
Du's shares closed 0.5 per cent lower at Dh9.52 on the Dubai Financial Market on Thursday.
Du is seeking aggressive expansion and has boosted its operations and services over the past year as market dynamics change with emerging technologies, including AI, the cloud and big data.
Last October, du unveiled du Tech and du Infra, after introducing du Pay, in a major shake-up to its business-to-business operations aimed at addressing growing demand for digital transformation services in the UAE.
At its Envision conference on Tuesday, the company said it is expecting the GPUs-as-a-service market to gain traction in the UAE. Companies are looking for more cost-effective ways to integrate AI capabilities into their operations, chief information and communications technology officer Jasim Al Awadi told The National.
