The ADX has its first listing of the year, in the form of Alef Education. Image Credit: Supplied

Dubai: The UAE's latest stock market listing, Alef Education, is having a bad day on its first day. At the 45-minute mark of the market opening, Alef was at Dh1.1, down 17 per cent from its listing price of Dh1.35. (The stock's overall traded value was at Dh87.73 million.)

Just over the one-hour mark, the stock has narrowed its drop to 11 per cent, and trading at Dh1.19. Closer to 1pm, the stock had cut the losses further, to just over 8 per cent and Dh1.24.

The education tech company had completed a successful IPO last week, getting over-subscribed 39x and taking Dh74 billion. Alef, which offers its solutions and services to public and private schools in the UAE and in select overseas markets, had raised Dh1.89 billion from the issue. At Dh1.35 a share, that meant a market cap of Dh9.45 billion on listing.

The Alef float was a chance for investors to take exposure in the UAE's high potential education sector, whether it's in service providers like Taaleem or Alef, or those like Al Mal Capital REIT, which has school properties in its portfolio.

This is the UAE's third stock market listing of the year, after Parkin and Spinneys on DFM, both of which enjoyed first-day bounces in their stock prices.

In a statement, Abdulhamid Mohammed Saeed Alahmadi, Chairman of Alef Education, said, "We are very pleased to be the first edtech company to list in the UAE, which will help facilitate investor access to a promising new economy industry.

"Education is a cornerstone of societal and economic advancement, and Alef Education is proud to be creating innovative AI solutions that help improve academic outcomes at a time of widening educational gaps worldwide." 

Alef Education offered 20 per cent of its issued share capital through 1.4 billion existing shares held by Tech Nova Investment – Sole Proprietorship llc and Kryptonite Investments llc.

"Investors are still getting a feel of new sectors, such as education-focused listings on UAE stock markets," said an analyst. "Alef Education has a sizeable track record, on contracts with UAE public and private schools, and when it comes to its financials. Even Taaleem had a slow start when it listed, and in the recent past, that stock has had a great run."

Alef's dividend plans

The company expects to pay a minimum dividend of Dh135 million this year and in 2025 for its new shareholders, which implies an annualised minimum dividend yield of 7.1 per cent based on the Dh1.35 listing price.

"The overwhelming demand for Alef Education's shares underscores the company's compelling equity story and significant growth potential, as recognized by a diverse group of investors," said Mostafa Gad, Global Head of Investment Banking at EFG Hermes, which advised Alef through to the listing.