Dubai: Parkin, the Dubai parking spaces operator, has set a price range of Dh2 to Dh2.10 a share for its IPO, subscription for which opens today and continues through to March 13. The float of the RTA affiliated entity is the UAE’s first IPO of 2024.
The share price range, which was set out in an advertisement carried in local media, is well in line with the slight ‘premium’ that market watchers were expecting. When Parkin had issued its prospectus last week, the consensus among analysts had been that it would be around the Dh2 a share mark.
The Dh2-Dh2.1 range thus sets up a Dh1.5 billion to Dh1.57 billion float for the company, which will be listing on DFM March 21. Parkin is offering 749.7 million shares (or 24.9 per cent), and which means the overall value of the company thus comes in at Dh6.3 billion at the top end.
"We provide a critical infrastructure to the Emirate with a systemic role in enabling mobility to support the city’s expansion plans," said Mohamed Al Ali, CEO of Parkin. "As Dubai continues to grow, our company will grow with it.
"The IPO will enable us to build on and accelerate our success; driving further innovation, delivering strong financial performance, and realizing the potential of our growth platform to scale up and diversify.
"Testament to our attractive equity story, we are pleased to have received strong interest from investors following our intention to float on the DFM.”
With a track record spanning almost three decades, Parkin delivers best-in-class parking management capabilities and solutions in line with Dubai's economic, urbanization and social ambitions
'Instant' over subscription
That Parkin will have an instant over-subscription is a given from the moment the process opens in the morning. Potential retail subscribers have had a good two months to prepare their funds to be part of this Dubai Government owned enterprise.
Each retail subscriber will receive a minimum of 2,000 shares each. But that is conditional on the kind of over-subscription Parkin will receive. If the over-subscription exceeds a certain level, the number of minimum shares received could be ‘lower than 2,000’.
Will the size of the offering change?
The company has the right to change the size of the offer at any point during the subscription period. "The earlier two RTA entities to float - Salik and Dubai Taxi Co. - both offered 24.9 per cent in their IPOs," said an analyst. "Since the Parkin IPO size is the same, the market and investors will be looking to see if the retail allocation will be increased."
Currently, retail investors - making up the first tranche - are offered 10 per cent of the issue. As for retail investors, their fervent hope will be that this percentage will be increased and thus raising the chances of them getting 2,000 shares each at the very least.
Parkin thus joins Salik and Dubai Taxi as the RTA entities to float and then list on DFM. While Salik’s IPO offer price was Dh2 a share, that of Dubai Taxi was set at Dh1.85.
So far, six Dubai Government owned entities have hit the markets since April 2022, starting with DEWA. The others are Empower and Tecom Group. (In November 2021, Dubai confirmed it had plans to float 10 government entities and scale up the DFM into a Dh3 trillion volume market.)
What will Parkin pay as dividend?
The Dubai company expects to distribute a minimum dividend payout of the higher of:
• 100% of profit for the year; or
• Free cash flow to equity, subject to distributable reserves requirements. ('Free cash flow' is essentially the EBITDA.)
For 2023, Parkin's EBITDA came to Dh414.3 million from Dh336 million a year before.
"This dividend policy is designed to reflect the company’s expectation of strong cash flow generation and expected long-term earnings potential," Parkin says in the ad.
