Dubai: The second of Dubai’s blue-chip IPOs is all set to get cracking – Tecom Group will offer a 12.5 per cent stake through the offer that opens June 16 and closes June 24. Tecom Group, the holding company for Dubai’s internet and media hubs, will set the offer share price on June 16 via book-building process.
The company expects to pay a dividend of Dh800 million for each of the next three years (through to October 2025).
Retail investors have been assigned up to 9 per cent of the overall share offering, the size of which could be increased. The minimum application size will be Dh5,000 and additional ones at Dh1,000 each. The listing on DFM is likely to be on July 5, based on a regulatory ad.
As one of Dubai’s biggest developers and landlords, for offices and residential, the IPO thus offers investors a chance to plug into the dynamics of the local property market. Tecom represents one of the 10 Dubai-owned enterprises that will go through IPOs and for a listing on the DFM, with DEWA being the first one to do so.
Offer size
Tecom Group will have an issued share capital of Dh500 million, and will offer 625 million shares through the float. “This could well be the last big IPO in the UAE before summer, and investor interest to participate in the UAE’s systemically important public sector IPOs remain robust,” said an analyst. “Tecom will have no issue closing on a high, much like what was witnessed with DEWA, and Borouge and AD Ports Group in Abu Dhabi.”
It was late last year that Dubai confirmed plans to bring 10 of its enterprises for a listing on DFM, and which would help raise the stock market to a Dh3 trillion market cap.
Tecom Group may already have identified some well-known potential anchor tenants. The Group has had a key role in diversifying Dubai’s economy and driving innovation and business growth. More companies on the stock market, from varying sectors, means a larger cross-section of potential investors, who might feel comfortable investing in a specific sector or a specific company.
- Mohammed Shaheen, CEO of Seven Capitals
Splitting up the offer
The Tecom IPO process kicks into gear on June 16, with the first and third tranches opening. The first is for retail investors, and they will need to hold a NIN (Investor Number) from DFM or have a bank account in the UAE. Businesses and enterprises too can participate, provided they meet the NIN and local bank account provisos.
“Those investors who want to buy into the Dubai Inc. story and who didn’t get the allotment they wanted from the DEWA float would be getting into Tecom,” said the analyst.
Up to 90 per cent of the 625 million shares on offer will be allotted to ‘professional investors’, which could be international entities, central banks, financial institutions, and family offices (with assets of Dh15 million). They need to commit to a minimum subscription of Dh5 million.
Also eligible are joint ventures which at any point over the last two years held net assets of Dh25 million or more. High networth individuals with net assets of Dh4 million (excluding their main residence) and more can also apply for Tecom shares under the professional investor category.
Under the third tranche, eligible employees of Dubai Holding can partake in the subscription, the regulatory ad states. (Also, 31.25 million shares are allotted to Emirates Investment Authority.)
“DEWA had some big names coming in as ‘cornerstone’ investors, including some of the biggest investment firms in Abu Dhabi,” said an analyst with a local bank. “Tecom may already have identified potential anchors.”
At the end of March, the Tecom Group’s built-to-lease properties covered 21.1 million square feet. Its land assets extend to 164.8 million square feet.
In all, Tecom oversees 10 business districts.
