Dubai to sell 25% stake in public parking business via IPO

DUBAI: The Dubai government is selling a 24.99% stake in Parkin, which oversees public parking operations in the emirate, through an initial public offering in the emirate’s first privatisation deal this year, Parkin said in a statement on Tuesday.

The firm operated about 179,000 paid public parking spaces across the Dubai emirate as of the end of last year, of which 4,000 or so were at multi-storey car parks (MSCP). It also manages an additional 18,000 spaces at developer-owned facilities, it said.

According to the government of Dubai’s media office, Parkin has a 100% share of Dubai’s on and off-street paid public parking market and 91% share of Dubai’s on- and off-street paid parking market.

Parkin, which expects to make its bourse debut next month, booked revenue of 779 million dirham ($212.1 million) in 2023, up 14% from a year earlier, while its core profit rose 23% to 414 million dirham.

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The news comes after government-owned Dubai Taxi Company (DTC) received over 150 billion dirhams ($41 billion) in investor orders for its $315 million initial public offering, a record for the city. The IPO was 130 times covered, according to a statement. The company said it was the highest oversubscription level ever for a Dubai IPO.

Meanwhile, Ahmed Hashem Bahrozyan, Chairman of Parkin’s Board of Directors, said, the IPO “will enable us to build on and accelerate our progress in supporting these ambitions, driving the Emirate’s future success,” according to a statement released by the Dubai government’s media office.

“As Dubai’s population and economy continue to grow, our company will grow with it. As a result, I am confident in Parkin’s future opportunities, delivering on our vision to become one of the leading parking providers in the world,” he added.

The statement also quoted Parkin CEO Mohamed Al Ali as saying: “With its systemic role in Dubai’s transport ecosystem, now and in the future, Parkin will operate at the centre of the city’s exciting and ambitious growth plans.”

The media office revealed that the number of registered vehicles in Dubai is expected to increase by 4% per annum on average to 2033, while demand for public parking is expected to increase by 4.8% per annum on average over the next ten years, driving 60% growth by 2033.

RTA’s strategic options

Reuters was first to report in June last year that the Roads & Transport Authority (RTA) was considering strategic options for its parking business and invited banks to pitch for roles in a potential IPO.

The RTA is monetising assets on behalf of the Dubai government as part of a wider privatisation programme to list state-linked companies and boost attention to its exchange, as the city keeps attracting droves of wealthy individuals and experiences strong population growth.

The RTA raised $1 billion from the sale of a 25% stake in toll-road operator Salik in 2022 and another $315 million in December from the sale of another 24.99% stake in Dubai Taxi Corporation.

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Both deals garnered strong demand from investors; books were oversubscribed multiple times.

“We had very good and great feedback” Chief Financial Officer Khattab Abu Qaoud said when asked about market appetite for the IPO.

He added that proceeds would go to Parkin’s sole shareholder Dubai Investment Fund (DIF).

Further IPO details

DIF plans to sell 749.7 million shares, with the offering beginning on March 5. The price range will be announced on the same day, and the subscription period ends on March 12 for retail investors.

Rothschild was appointed as independent financial adviser while Emirates NBD, Goldman Sachs and HSBC are acting as joint global coordinators and joint bookrunners.

After the offering, Parkin plans to pay a semi-annual dividend in April and October, Abu Qaoud said, adding the minimum dividend payout for 2024 would be more than the net profit for the year, or exceed free cash flow to equity.

Companies domiciled in the Gulf Cooperation Council raised $11 billion in IPO proceeds in 2023, down 45% from 2022. GCC IPOs accounted for 40% of proceeds raised in EMEA during 2023, down from 56% during 2022, LSEG data showed.