Dubai: The UAE is getting its third IPO of the year, with Alef Education Holding offering 1.4 billion shares, which is 20 per cent of its equity capital. Subscription opens from May 28 to June 4.
This will also be the first listing for the ADX this year.
Alef Education offers AI-powered learning solutions and is 'indirectly majority owned by Abu Dhabi Capital Group'. ● The group provides digital educational resources to all public and many private schools in the UAE. (It has a 100 per cent penetration rate among Cycle 2 (Grades 5-8) and Cycle 3 (Grades 9-12) public schools and serves 40-50 per cent of the private school market in the UAE, said a statement.)
The shares to be offered via the IPO represent those held by Tech Nova Investment – Sole Proprietorship llc and Kryptonite Investments llc.
90% dividend
Alef Education expects to pay a minimum dividend payout ratio of 90 per cent of the net profit generated during 2024 and 2025.
The ADX listing will likely be or or around June 12. “The global edtech market has experienced exponential growth over the last couple of years, supported by increased government spending and initiatives to leverage digital and AI tools to transform the way that education is delivered and students learn," said Abdulhamid Mohammed Saeed Alahmadi, Chairman.
"We have been – and will continue to be – both a proponent and beneficiary of this growing trend, which has helped fuel the growth and expansion of our business.
In Dubai, Parkin and Spinneys opened the UAE's IPO season, clocking in significant subscriber participations.
We are not only offering investors the opportunity to participate in the growth of a company with a truly unique proposition – as the first-ever edtech company to be listed in the UAE – but also one that is operating in a sector with considerable tailwinds, growth, and value drivers
Retail and institutional investors
Retail investors are getting 8 per cent of the float allocation, and institutionals getting the rest. The company has confirmed a guaranteed 2,000 shares apiece to subscribers. (The size of offering or the individual tranches could be changed at any point during the subscription period.)
Dividend policy
Alef Education will adopt a semi-annual dividend distribution policy, with that for H1 to be paid in the fourth quarter of a year and the next paid during the second quarter of the following year.
The company intends to pay a minimum dividend amount of Dh135 million during 2024 and 2025.
"If during the minimum dividend guaranteed period, the portion of the declared dividend to all shareholders (other than the selling shareholders) falls below the intended target, then the selling shareholders may - subject to not breaching AAOIFI Shariah standards - forgo their right to receive dividends to the extent necessary," said a statement. And use these to pay the intended target minimum dividend amount to other shareholders.
We intend to solidify our market leadership at home and grow our presence across our target markets through continued investment in our digital capabilities
According to Geoffrey Alphonso, CEO of Alef Education, “With an agile and asset-light business model, we are highly cash-generative and able to deliver growth with limited capital requirements.
"Benefiting from an unlevered balance sheet, market-leading profitability margins, strong revenue visibility, and trusted relationships with our customers, we are well positioned to capitalise on favourable market trends to scale our platform, accelerate growth, and deliver sustainable value for all our stakeholders."
High on growth chances
2024 has all the makings of another bumper year for IPOs in the UAE. In Saudi Arabia, there continues to be a flood of new offerings. "Alef Education marks yet another opportunity for investors to capitalize on the growth of the education sector using superior tech platforms," said Sameer Lakhani, Managing Director of Global Capital Partners. "It’s generous dividend policy and cash conversion ratio augurs well for growth opportunities and investors will be keenly eyeing the valuation that is offered by the company in the next few days."
