Dubai to sell stake in Tecom Group

Dubai plans to sell a 12.5 percent stake in business park operator Tecom Group in an initial public offering, the second offering by the government this year to boost trading volumes and increase liquidity on the exchange.

State-owned Dubai Holding will sell 625 million shares in Tecom, according to a statement. The government is aiming to raise at least $500 million from the listing, according to people familiar with the matter.

The price range will be announced on June 16, the same day when the IPO starts. UAE retail offering starts from June 16 to June 23 and qualified institutional offering from June 16 to June 24

The selling shareholder reserves the right to amend the offering and size. Expected date of listing on Dubai stock exchange is July 5. Emirates NBD Capital, First Abu Dhabi Bank, Goldman Sachs, Morgan Stanley and UBS are the joint global coordinators and joint bookrunners

Tecom’s float comes at a time when the Middle East is enjoying an unprecedented listings boom fueled by high oil prices, equity inflows and a drive by regional governments to list state-owned assets. IPOs in the region have raised $13.4 billion in the first five months of the year, already eclipsing the amount raised in any other first half, data compiled by Bloomberg show.

Dubai, which missed out entirely on a flurry of share sales in neighboring Abu Dhabi and Saudi Arabia last year, unveiled a plan in November to list 10 state firms in a bid to revive trading volumes and boost liquidity.

The first of those privatizations was the $6.1 billion IPO of the city’s main utility, Dubai Electricity & Water Authority, in April. That listing was the world’s second biggest this year and drew overwhelming demand from both regional and international investors.

While DEWA surged 20 percent on its first day of trading, it has since given up many of those gains and is now trading about 3 percent above its IPO price. Volumes have also dwindled from the first week.

Tecom houses more than 7,500 companies and 10 large business complexes including Dubai Internet City and Dubai Media City. It is targeting an annual dividend payout of 800 million dirhams ($218 million) over the next three years.