Dubai Media City and Internet City
UAE's recent crop of IPOs have focussed hard on dividend policies to net investor buy-in. Image Credit: WAM

Dubai: Tecom Group is set to price its initial public offering at the top of the range, signaling continued strong demand for listings in the Middle East.

Dubai’s government may sell shares in the business-park operator at 2.67 dirhams apiece, according to terms seen by Bloomberg on Thursday, raising as much as $454 million. The initial range was set at Dh2.46 to Dh2.67 and attracted enough demand to cover the books at the top end on the first day.

Tecom’s IPO is the second of 10 planned privatizations as part of Dubai’s plans to deepen its capital markets. The first of these share sales, Dubai Electricity & Water Authority’s (DEWA) $6.1 billion offering in April, drew overwhelming demand from both regional and international investors and ranks as the world’s second-biggest IPO of the year.

Tecom houses more than 7,500 companies and 10 large business complexes including Dubai Internet City and Dubai Media City. Its customers include Microsoft Corp., Alphabet Inc.’s Google and Meta Platforms Inc.’s Facebook.

Its listing comes amid a surge in Dubai property values. Prime real-estate prices rose 56 per cent in 2021, according to Knight Frank, topping every other major city and far exceeding increases of 1.3 per cent in London, 3.6 per cent in New York and 19 per cent in San Francisco.

Like many other listings in the region, Tecom is luring investors in with juicy dividend yields. It is targeting an annual dividend of Dh800 million over the next three years, implying a yield of about 6 per cent at the top end of the price range.