Dubai Taxi company has a 44 per cent market share and a fleet size in excess of 7,000 vehicles. Image Credit: Supplied

Dubai: Dubai Taxi Company will be offering 624.75 million shares – making up 24.9 per cent of its capital – in what is likely to be a bumper IPO, with the share price range to be announced November 21.

Subscription will also be opening the same day. (The selling shareholder has the right to raise size of the offering prior to the end of the subscription period.)

First dividend 

For 2024 (and thereafter), a 'minimum of 85 per cent of annual net profit' will be up for dividend distribution for the relevant period.

With regard to its performance in the fourth quarter of 2023, Dubai Taxi expects to distribute a first dividend of at least Dh71 million in April 2024.

Retail investors will have access to 10 per cent of the issue size, representing 62.47 million shares. The minimum subscription has been set at Dh5,000 and in increments of Dh1,000 thereafter.

Each subscriber to the first tranche will be guaranteed a minimum allocation of 2,000 shares.

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The second tranche, meant for professional investors, will have 562.27 million shares to aspire to. (Bloomberg had earlier reported about Dubai Taxi Co.'s IPO plans and onboarding of banks to get the process started.)

"Dubai continues to demonstrate its commitment to growing world-class businesses and strengthening its robust capital markets," said Abdul Muhsen Ibrahim Kalbat, Chairman of Dubai Taxi Company.

Benefitting from Dubai’s exceptional infrastructure and an ambition to double the size of its economy by 2033, Dubai Taxi Company remains key to the growth, mobility and sustainability vision of Dubai.

- Abdul Muhsen Ibrahim Kalbat of Dubai Taxi Company

And plays an 'integral role in moving and connecting the millions who call Dubai home and the rapidly increasing number of tourists who visit the UAE every year'. Through this offering, DTC is proud to support the continuation of the privatization programme pursued by Dubai, providing a further opportunity for foreign investment and fostering a culture of world-leading innovation and industry.”

DFM's blockbuster year
The DFM has been the best performing stock market in the Gulf year-to-date, gaining nearly 20%. Even with the volatility induced after October 7's Israel-Gaza crisis, the market - as well as those in the Gulf - have been fairly resilient.

It's proving to be a busy Q4 for UAE stock markets and its investors, with Investcorp Capital having just completed its subscription, while the crypto mining company Phoenix will open its IPO November 16. (Both will list on ADX.)

Key dates for IPO

After opening the subscription November 21, investors in the first tranche have until November 28 to apply, while those aiming for the second tranche allotments have until November 29. The shares are to list on Dubai Financial Market December 7.

Dubai Taxi thus represents the second opportunity for investors – retail and institutional – to access the growth possibilities in the emirate’s transportation sector. The toll-gate operator Salik was the first.

The company has a claimed 44 per cent share of the local market (in terms of fleet size). The next biggest player’s share is 22 per cent.

According to the prospectus ad, Dubai Taxi made 44 million trips between July 1, 2022 and June 30, 2023. The company operates more than 7,000 vehicles, with 5,216 being taxis and the others limousines.)

Opening up new services, revenue lines
Dubai Taxi has drawn up quite an impressive roadmap for its medium-term plans, and for which the funds from the IPO will be handy.

These include next-generation public transport services, including autonomous vehicles. Another would be to establish and operate vehicle rental services.

"The Dubai Taxi IPO marks the continuation of divestment of part of the RTA portfolio following the significant success of Salik (which was in September 2022 and offered 24.9 per cent through the IPO)," said Sameer Lakhani, Managing Director at Global Capital Partners. "Demand is expected to to be strong given the cash flow streams this IPO offers and give retail investors renewed incentives to invest.

"More so, after the previous two UAE IPO announcements - by Investcorp Capital and Phoenix Group - had a relatively institutional investor focus."