Dubai: After Parkin, Dubai’s largest provider of paid parking facilities in Dubai, announced plans to publicly list on the financial market (DFM) this month, if you were looking to invest in the firm and wanted to know how and where, here’s all you need to know.
With the company’s CEO, Mohamed Al Ali, revealing on Tuesday how the initial public offering (IPO) already attracted “strong interest from investors”, and market analysts eyeing bigger-than-expected demand, let’s look in detail at how you can benefit from investing in this government-run IPO company.
How Parkin’s IPO announcement applies to investors
Parkin, which exclusively operates all public on-, off-street parking and public multi-storey car parks across Dubai, is offering 749.7 million shares, or a stake of 24.99 per cent in the company, in different portions to potential investors. But what portion of these are for individual investors?
The first portion of shares are made available to ‘retail’ investors, who are non-professional individual investors who invest money themselves or through brokerage firms. These investors are those with a UAE-based bank account and a DFM Investor Number (known as ‘NIN’).
Any individual or institution can apply for an Investor Number (NIN) with the Dubai Central Securities Depository LLC (Dubai CSD) in order to trade both DFM and Nasdaq Dubai listed securities.
(Dubai CSD is licensed and governed by the Securities and Commodities Authority (SCA). The DFM and Nasdaq Dubai are open to investors of any nationality based in any country.)
The second portion of shares in Parkin is for institutional investors (legal entities like banks, funds, insurers or any large institution). Each subscriber will initially be allocated a minimum of 2,000 shares, but that’s subject to change on demand for the IPO.
Minimum investment threshold for Parkin investor?
The share offering's subscription period will run from March 5 to March 12, which is the time period investors can subscribe to shares. Beyond March 12, individual investors cannot subscribe to any more shares before trading commences on March 21.
Similarly, after March 13, professional investors or institutions cannot subscribe to any more shares, a day after which their investments will be allocated. Individual investors will be officially allotted on March 14, and this is when any excess subscription amount, if any, will be refunded back.
IPOs are often under-priced to ensure that the issue is fully subscribed or over-subscribed by the public investors, even if it results in the company not receiving the full value of its shares.
If an IPO is underpriced, the investors of the IPO expect a rise in the price of the shares on the offer day. It increases the demand for the issue. Furthermore, underpricing compensates investors for the risk that they take by investing in the IPO.
An offer that is oversubscribed two to three times is considered to be a “good IPO.”
How can investors subscribe to Parkin shares?
Each person looking to subscribe shares in Parkin needs to submit one subscription application each, through his or her bank or brokerage, in his or her personal name (unless he or she is acting as a representative for another subscriber).
Subscribers or potential investors must ensure to have an updated DFM Investor Number (NIN) and complete all relevant fields in the subscription application, along with all the required documents and submit it to the bank, together with the subscription amount expected to be made during the offer period.
• Register to DFM eServices at DFM Website or DFM Smart Services App
• Login with the username and password
• Select the eFORMS tab
• Select the form and complete it
• Attach the required documents and click on ‘Submit’
• The investor will receive the Investor Number through SMS
• You will be notified by email once the status of the request is updated
(UAE nationals and residents need a valid copy of Emirates National ID, while non-residents need a valid copy of the passport.)
After obtaining an Investor Number (NIN) from Dubai CSD, appoint a licensed broker by opening a trading account and complete the necessary forms. The broker carries out the trading transactions (selling and buying) at your instructions.
Different brokers may offer different services and products to their clients. To select a brokerage firm, view the full list of licensed brokerage firms on the DFM website, including common members across DFM and Nasdaq Dubai and their services. You can contact the brokers to inquire about the products and services they offer to investors.
The Dubai Financial Market (DFM) makes its website (www.dfm.ae) and its mobile application available to those with a DFM Investor Number (‘NIN’) and holding a valid iVESTOR card (which you can apply for on DFM when opening a trading account). This is also possible through online banking via UAE Central Bank payment gateway or through UAE Central Bank Fund Transfer (‘FTS’).
The investor choosing the FTS method will be required to provide their valid NIN, along with the value of the offer shares subscribed for, with the dates relevant to the methods of payment of the subscription amounts.
• All IPOs are most often available only for the first few days of the bidding process. If you are planning to bid, bid within the first few days, if possible on the day of its availability. Bidding early as possible increases your chances of allotment.
• Most often there will be more demand than supply for a new IPO. For this reason, there is no guarantee that all investors interested in an IPO will be able to purchase shares.
• Those interested in participating in an IPO may be able to do so through their brokerage firm, although access to an IPO can sometimes be limited to a firm’s larger clients.
• Generally speaking, IPOs are popular among investors because they tend to produce volatile price movements on the day of the IPO and shortly thereafter. This can often produce large gains.
• Ultimately, investors should judge each IPO according to the prospectus of the company going public, as well as their financial circumstances and risk tolerance.
