'Salik' Announces Intention to Float on Dubai Financial Market

Salik Company, Dubai’s exclusive toll gate operator, today announced its intention to proceed with an initial public offering (IPO) and to list its ordinary shares for trading on the Dubai Financial Market (DFM).

In a statement , Salik stated that one billion five hundred million (1,500,000,000) shares each with a nominal value of AED0.01 will be made available in the Offering, representing 20% of Salik’s total issued share capital.

It added that the offering comprises Individual Subscribers (first tranche); Professional Investors (second tranche), and Eligible Employees (third tranche).

The subscription period will open on 13th September 2022 and is expected to close on 20th September 2022 for UAE Retail Investors and on 21st September 2022 for Qualified Investors.

The Government of Dubai, represented by the Department of Finance, (the "Selling Shareholder"), reserves the right to amend the size of the Offering at any time prior to the end of the subscription period at its sole discretion, subject to applicable laws and the approval of the Securities & Commodities Authority (the "SCA").

The Internal Sharia Supervision Committee of Emirates NBD Bank has issued a Shariah pronouncement confirming that, in its view, the Offering is compliant with Shariah principles.

Admission is expected in September 2022 The share capital of the Company, as at the date of the listing (the "Listing"), has been set at AED75,000,000, divided into 7,500,000,000 Shares paid-in-full, with the value of each Share being AED0.01.

Following the Offering, the Company intends to pay dividends twice, in April and October of each fiscal year. The Company expects to pay a first dividend for the second half of 2022 by April 2023, and it expects to pay 100% of the net profit, after keeping aside the statutory reserves required by law (statutory reserves expected to amount to AED37.5 million for the first dividend).

From 2023 onwards, the Company expects to pay 100% of the net profit available for distribution as dividend.

This dividend policy is subject to consideration by the Board of Directors of the cash management requirements of the Company’s business for operating expenses, interest expenses and anticipated capital expenditures and investments.

In addition, the Company expects that the Board will also consider market conditions, the then current operating environment in the Company’s markets, and the Board’s outlook for the Company’s business and growth opportunities.

Mattar Al Tayer, Chairman of Salik’s Board of Directors, said, "Thanks to the wise leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, Dubai has succeeded in laying a clear economic path and an ambitious growth plan that includes attracting direct strategic investments."

He added, "This June, His Highness Sheikh Mohammed bin Rashid issued Law No. 12 of 2022, establishing ‘Salik’ as a public joint stock company to operate the toll road system, and today’s announcement is a continuation of the privatization programme pursued by the Emirate of Dubai and of its plans to double the size of its financial market to three trillion dirhams and attract foreign investments. Salik has played a pivotal role in managing traffic in Dubai for 15 years and will continue to remain at the heart of expansion plans in the road and transport sector, in support of the Emirate’s economy."

The Chairman further stated that the Company is in a prime position to benefit from additional growth opportunities and is designed to ensure efficient operations.

It is underpinned by an effective regulatory framework that supports future growth, and a business model that requires low capital expenditures. It also boasts cash conversion margins that are considered best-in-class.

Al Tayer stressed that the infrastructure of the road and transportation network in the Emirate of Dubai, which is supported by advanced technology, is one of the best in the world, and the road network has maintained the first position in terms of road quality globally for several years.

Ibrahim Sultan Al Haddad, Chief Executive Officer of Salik, stated, "As the exclusive toll gate operator in Dubai, Salik is a truly iconic brand which provides investors with a unique opportunity to access Dubai’s exciting growth story through exposure to a high-quality infrastructure asset. Salik’s custom-built technology facilitates the frictionless and affordable movement of residents and tourists between Dubai’s many landmark destinations."

He added, "The initial public offering represents an important milestone in the journey of Salik as it provides the Company with an opportunity to consolidate its success as an exclusive operator of toll gates in Dubai, currently operating eight gates distributed in strategic locations across the busiest corridors of the Emirate.

The Company’s long-term principles and values are centered around customers, the environment, human capital, and modern technologies.

"At the community level, Salik provides exemptions and subsidies for vehicles of determination, public transportation, and school buses. Salik’s focus on people extends to improving customer experience and developing human capital, with a focus on the values of equality and inclusion."

The Government of Dubai, represented by the Department of Finance, expects to sell 20% of the total issued share capital of Salik (equivalent to a total of 1,500,000,000 number of Shares), with the Selling Shareholder retaining the right to amend the size of the Offering at any time prior to the end of the subscription period at its sole discretion, subject to applicable laws and the approval of the SCA.

Further, as part of the Qualified Investor Offering, and in accordance with both the Companies Law and the Dubai Law, the following will apply: five percent of the Offering will be reserved for offer to the Emirates Investment Authority (the "EIA"), and; five percent of the Offering will be reserved for offer to the Pensions and Social Security Fund of Local Military Personnel (the "Fund").

The UAE Retail Offering subscription period is expected to run from 13th September 2022 to 20th September 2022, with the Qualified Investor Offering subscription period expected to run from 13th September 2022 to 21st September 2022.

The offer price per Share (the "Offer Price") will be determined through, and following, a book building process. Investors participating in the UAE Retail Offering will subscribe for the Shares at the Offer Price.

The completion of the Offering and Admission is currently expected to take place in September 2022, subject to market conditions and obtaining relevant regulatory approvals in the UAE, including approval of Admission to Listing and trading on the DFM.

Pursuant to an Underwriting Agreement to be entered into between the Company, the Selling Shareholder and the Joint Bookrunners prior to the date of Listing (the "Underwriting Agreement"), the Shares held by the Selling Shareholder shall be subject to a lock-up from the date of the Underwriting Agreement up to and including 180 calendar days from Listing (the "Lock-up Period"), subject to certain permitted transfers as set out in the prospectus.

The Company shall be subject as well to a Lock-up Period as set out in the prospectus.

Moelis & Company UK LLP DIFC Branch has been appointed as the Independent Financial Advisor and Emirates NBD Capital PSC has been appointed as Financial Advisor to Salik.

Emirates NBD Capital, Goldman Sachs International, and Merrill Lynch International have been appointed as Joint Global Coordinators and Joint Bookrunners.

Citigroup Global Markets Limited, EFG Hermes UAE Limited (acting jointly with EFG Hermes UAE LLC), and HSBC Bank Middle East Limited have been appointed as Joint Bookrunners.

Emirates NBD Bank PJSC has been appointed as the Lead Receiving Bank. 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 have also been appointed as Receiving Banks.