After Dubai’s road-toll operator Salik announced that it will sell 1.5 billion shares a week from now, here's what UAE residents need to know about when to buy the shares ahead of its initial public offering (IPO), and how they can go about it.
Salik, which owns and operates eight toll gates across Dubai, on Monday announced that it will sell a 20 per cent stake, to retail, institutional investors and employees this month, and an 80 per cent stake will be controlled by the government.
Salik, which is located at Al Barsha, Jebel Ali, Al Mamzar North, Al Mazar South, Al Safa, Al Garhoud, DXB Airport Tunnel and Al Maktoum Bridge, will announce final per share price on September 22, just ahead of the expected listing of the IPO shares on September 29.
By investing and becoming a shareholder, investors will reap the benefit of payouts in the form of dividends. The company, which will pay out dividends in April and October each year, will allocate all of its profits for shareholder payout.
How can investors subscribe to or buy Salik shares?
Each person looking to subscribe to or purchase shares in Salik needs to submit one subscription application each, through his or her bank or brokerage, in his or her personal name (unless he or she is acting as a representative for another subscriber).
Investors can subscribe to Salik's IPO, which is expected to be oversubscribed multiple times, through Emirates NBD, Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Ajman Bank, Commercial Bank of Dubai, Dubai Islamic Bank, Emirates Islamic Bank, First Abu Dhabi Bank, Mashreq Bank, MBank and Sharjah Islamic Bank.
Subscribers or potential investors must ensure to have an updated NIN and complete all relevant fields in the subscription application along with all the required documents and submit it to the bank, together with the subscription amount expected to be made during the offer period.
• Register to DFM eServices at DFM website or DFM Smart Services mobile application
• Login with the username and password
• Select the eFORMS tab
• Select the form and complete it
• Attach the required documents and click on ‘Submit’
• The investor will receive the Investor Number through SMS
• You will be notified by email once the status of the request is updated
(UAE nationals and residents need a valid copy of Emirates National ID, while non-residents need a valid copy of the passport.)
After obtaining an Investor Number (NIN) from Dubai CSD, appoint a licensed broker by opening a trading account and complete the necessary forms. The broker carries out the trading transactions (selling and buying) at your instructions.
Different brokers may offer different services and products to their clients. To select a brokerage firm, view the full list of licensed brokerage firms on the DFM website, including common members across DFM and Nasdaq Dubai and their services. You can contact the brokers to inquire about the products and services they offer to investors.
The Dubai Financial Market (DFM) makes its website www.dfm.ae and its mobile application available to those with a National Investor Number (‘NIN’) and holding a valid iVESTOR card (which you can apply for on DFM when opening a trading account). This is also possible through online banking via UAE Central Bank payment gateway or through UAE Central Bank Fund Transfer (‘FTS’).
The investor choosing the FTS method will be required to provide their valid NIN, along with the value of the offer shares subscribed for, with the dates relevant to the methods of payment of the subscription amounts.
What is the minimum investment threshold for a potential Salik investor?
While the minimum subscription size for individual investors and Salik employees has been set at Dh5,000, any additional investments can be made in lots of at least Dh1,000. When it comes to institutional investors, the base subscription has been set at Dh1 million. There is no maximum limit, and each subscriber will be allocated a guranteed minimum of 1,000 shares.
The share offering's subscription period for individual investors and Salik employees is expected to run from September 13 to September 20, meaning starting September 13 potential investors can subscribe to or buy shares. But before that, those looking to book shares can send in their subscription forms via their respective banks and express their interest in buying shares.
Beyond September 20, individual investors and Salik employees cannot subscribe to or buy any more shares before trading commences. Similarly, after September 21, professional investors or institutions cannot subscribe to or buy any more shares, a day after which their investments will be allocated.
The price range at which you, as a potential investor, can subscribe to Salik IPO shares will be in UAE dirhams and published prior to or on the day of the opening of the offer period on September 13. Individual investors and Salik employees will be allotted shares no later than September 27, and this is also when any excess subscription monies, if any, will be refunded back.
(What does it mean to 'allot' shares? When an IPO gets announced, investors from different categories start applying for shares. Once the applied share gets credited to their trading account, it is referred to as allotting shares or 'IPO allotment'.)
The price range at which you, as a potential investor, can subscribe to Salik IPO shares will be in UAE dirhams and published prior to or on the day of the opening of the offer period on September 13. If you are an individual investor or Salik employee subscribing to Salik shares, you will get an SMS notification of the final and official allocations on September 27.
'Subscription' or a share that is 'subscribed' are terms used to describe newly issued shares that an investor agrees to purchase before the official listing date. Subscriptions are common during IPOs and subsequent offerings. Institutional or accredited investors are most often those eligible to subscribe to a new issue.
IPOs are often under-priced to ensure that the issue is fully subscribed or over-subscribed by the public investors, even if it results in the company not receiving the full value of its shares.
If an IPO is under-priced, the investors of the IPO expect a rise in the price of the shares on the offer day. It increases the demand for the issue. Furthermore, under-pricing compensates investors for the risk that they take by investing in the IPO.
An offer that is over-subscribed two to three times is widely considered among analysts to be a 'good IPO'.
What to keep in mind when buying shares in any IPO?
If you were wondering how you can increase your chances of an allotment in an IPO, here’s what you should know. All IPOs are most often available only for the first few days of the bidding process.
If you are planning to bid, bid within the first few days, if possible one day of its availability. Bidding early as possible increases your chances of allotment.
Most often there will be more demand than supply for a new IPO. For this reason, there is no guarantee that all investors interested in an IPO will be able to purchase shares.
Those interested in participating in an IPO may be able to do so through their brokerage firm, although access to an IPO can sometimes be limited to a firm’s larger clients.
Generally speaking, IPOs are popular among investors because they tend to produce volatile price movements on the day of the IPO and shortly thereafter. This can often produce large gains.
Ultimately, investors should judge each IPO according to the prospectus of the company going public, as well as their financial circumstances and risk tolerance.