DIP sets lower price range for IPO — and books were covered within minutes

Dubai Investments set the offer range for its 20% float of the Dubai Investments Park landlord at AED 1.10-1.15 per share, valuing DIP Holding at AED 9.5-10 bn at listing, according to the price range announcement (pdf). That is some 7-13% below the AED 10.8-11 bn management had previously valued the unit at, by our math. It is also below the bottom of the AED 11-14 bn range banks were pitching last week.

Investors were haggling over the price: Potential investors were asking Dubai Investments to lower its valuation expectations and sweeten the offering further, even after it committed to some AED 2.2 bn in dividends over three years. They asked for a yield closer to that of Emaar’s 9%, as opposed to the 5% yield offered with a valuation of around AED 14 bn. It landed nearer to Emaar, with an implied dividend yield of 7.27-7.60%.

Early demand suggests it’s working: Orders covered the full offering within minutes of books opening, Bloomberg reports.

Why it matters: The markdown shrinks the raise to AED 1.9-2.0 bn (USD 520-543 mn), down from the c. AED 2.2 bn the management valuation implied, putting it below Dubai Residential REIT’s USD 584 mn float last May. Still, the IPO matters for other reasons: DIP is the first UAE listing since the war froze the pipeline. Dubai Holding, Emirates Global Aluminium, and Al Habtoor have all paused or shelved listings this year, and the issuers queued behind DIP are watching whether buyers will turn up.

A safety net for day one: Dubai Investments has appointed xCube as stabilization manager. It will hold 10% of the offering, some 173.5 mn shares, to buy stock in the market if the price falls below the final offer price in the first 30 days of trading.

What’s next: Subscriptions close on 3 November, the final price comes on 4 November, and trading is expected to start on or around 11 November. We’ll be keeping an eye on how trading looks on the DFM — renewed Houthi attacks on Saudi Arabia have been dragging UAE stocks lower as the conflict’s risk premium rises again.

ADVISORS- Citi, Emirates NBD Capital, and HSBC are joint global coordinators, while Abu Dhabi Commercial Bank, Arqaam Capital, Dubai Islamic Bank, and our friends at EFG Hermes UAE are bookrunners. Emirates NBD is serving as lead receiving bank, alongside ADCB, ADIB, Dubai Islamic Bank, Emirates Islamic, FAB, and Wio. Al Mal Capital is financial advisor, and Emirates NBD Capital is also listing advisor.