Dubai’s Tecom draws $9.6b in orders for $454m IPO

Dubai business park operator Tecom Group drew orders worth $9.63 billion for its initial public offering, the latest Middle East listing to attract strong investor demand amid a boom in regional share sales.

Dubai’s government sold 625 million shares at 2.67 dirhams each, raising US$454 million, according to a statement on Monday. The price implies a dividend yield of about 6%, following a regional trend of luring investors with juicy returns, and a market capitalization of 13.4 billion dirhams (US$3.65 billion).

The price range had been set at 2.46 dirhams to 2.67 dirhams per share and investors put in enough orders to cover the books within hours on the first day. Despite being covered 21 times, Tecom’s IPO proved less popular than some recent Middle Eastern listings.

Dubai’s main utility, Dubai Electricity & Water Authority, was 37 times oversubscribed, excluding cornerstone and strategic investors, while specialty plastics maker Borouge’s IPO was about 42 times oversubscribed.

IPOs in the Middle East are headed for their best first half on record as high oil prices and foreign equity inflows buoy local stocks and encourage companies to tap the markets. The strong investor demand appears to have held up even as regional equities have corrected sharply since May, tracking a global sell off as well as a recent drop in oil prices.

Tecom’s IPO is the second of 10 planned listings of state-owned assets as part of Dubai’s plans to deepen its capital markets after years of flagging volumes. DEWA’S US$6.1 billion share sale in April was the first, and a float of the city’s road-toll system is set to follow after the summer, Bloomberg News has reported.

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. The listing comes as Dubai’s property values have surged, with increases topping those of every other major city last year, according to Knight Frank.

Tecom shares are set to start trading on the Dubai stock exchange on July 5. Emirates NBD Bank, First Abu Dhabi Bank, Goldman Sachs Group Inc., Morgan Stanley and UBS Group AG are the joint global coordinators and joint bookrunners. –BLOOMBERG