Dubai lifted the stake it plans to sell in port operator DP World to 23 percent on stronger than expected demand, allowing it to raise as much as $4.96 billion in the Middle East's largest initial public offering.
Two people familiar with the transaction told Reuters the shares would price at or close to the top of the $1.00 to $1.30 indicative price range the world's fourth-largest container handler gave earlier this month.
One of the people, speaking on condition of anonymity, said prospective investors are now being given an indicative price range of $1.25 to $1.30. Pricing will be decided on Tuesday. DP World will sell 3.245 billion shares, plus a greenshoe over-allotment option of 572.7 million shares, the company's state-owned parent, Dubai World, said in a statement on Monday. It had planned to sell up to 20 percent of the company.
"We have seen strong demand both internationally from institutional investors and in the UAE from retail investors," Dubai World Chairman Sultan bin Sulayem said in the statement. DP World had been looking to sell 2.822 billion shares priced at between $1 and $1.30 each, and probably a further 498 million shares as part of the greenshoe option to raise a total of $4.32 billion at the top of the range.
The government will use the IPO proceeds, including about 25 percent in the form of shares, to pay back investors who bought $3.5 billion of Islamic bonds that DP World's then owner - Ports, Customs & Freezone Corp - sold in 2005. The bonds, of which as much as 30 percent of the value are convertible to shares in DP World, mature in January.
DP World, which last year bought British port operator P&O for $6.8 billion, manages 42 terminals in 22 countries. It plans to almost double capacity to 90 million containers by 2017, expanding in countries including the UAE and China.
Final pricing for the DP World sale, the biggest in the region since Saudi Telecom Co raised $2.72 billion in 2003, should take place around November 21, Dubai World said. The sales is open all institutions, Gulf Arab nationals and residents of the United Arab Emirates. The retail portion of the sale closed on Thursday.
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