Dubai road toll operator Salik becomes latest firm to IPO
DUBAI, United Arab Emirates (AP) — Dubai toll gate operator Salik announced Monday it will make an initial public offering on the city-state's stock market, becoming the latest state-linked company to list.
Salik plans to offer 1.5 billion shares, or 20% of the company's worth, in a listing on the Dubai Financial Market. Salik said it would offer a per-share price Sept. 22, a week before the shares would be traded on the bourse.
It’s part of a wider plan announced last November by Sheikh Maktoum bin Mohammed Al Maktoum, the son of Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum, to list 10 state industries on the stock market to boost its profile and raise new capital for the skyscraper-lined emirate.
But so far, results have been mixed for investors as Dubai's state power utility now trades barely higher than its opening and free-zone operator TECOM just below.
Salik began tolling drivers on the emirate's massive Sheikh Zayed Road highway in 2007. Today, it has eight gates charging drivers 4 dirhams ($1.09) as they pass via radio-frequency identification tags on their vehicles. Dubai's government would remain its largest shareholder with 80% of its stock after the IPO.
Officials initially described Salik, which can mean “openly passable” in Arabic, as a means to limit traffic on Sheikh Zayed Road in rush hour from the neighboring emirate of Sharjah, a bedroom community for Dubai. Today, however, some drivers routinely take other highways or feeder roads to dodge the tolls.
Still, Salik has been a major moneymaker for the city-state’s Roads and Transport Authority. Some 3.6 million vehicles in the United Arab Emirates have Salik tags. Last year, Salik reported profits of over $353 million, off some 370 million charged trips through its gates, according to financial results it published in a newspaper ad Monday.
The ad also suggested that price increases could be on tap for Salik, as the firm has permission from the government to raise rates based on inflation. The ad also said Salik was considering so-called “dynamic pricing” — such as charging drivers more at busy times, for instance.
A renewed wave of IPOs has struck across the Gulf Arab states, likely fueled by the listing of the Saudi Arabian Oil Co., or Saudi Aramco. Even long-haul carrier Emirates, the jewel of Dubai Inc., has been discussed as a possible IPO target.
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Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellAP.
