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IPO expected for Dubai road toll operator

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It costs AED4 ($1.08) to pass through the toll gate at Salik's Al Garhoud Bridge
  • Listing Salik on local stock exchange could increase liquidity
  • Dubai Electricity and Water Authority (DEWA) IPO raised $6.1bn 
  • Other IPO plans include business park operator TECOM  

Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum on Wednesday issued a new law establishing road toll operator Salik as a public joint stock company (PJSC), paving the way for a potential initial public offering (IPO). 

According to the law, Salik Company PJSC will have a term of 99 years, starting from the date of its registration in the Trade Register. 

While the ruler’s statement made no reference to an initial public offering timeframe, the move is expected to lead to an IPO, first mooted late last year.

Dubai said in November that it plans to list its automatic road toll collection system on the local stock exchange as part of an attempt to increase liquidity.

Under the new law, the Dubai Government owns all the shares of Salik Company PJSC but the Executive Council of Dubai is authorised to determine the percentage of shares that can be offered for subscription either through an IPO or private placement.

If the company’s shares are offered for subscription in a public offering or private placement, the Dubai Government should own shares worth a minimum of 60 percent of the company’s capital, it added.

Dubai has already announced IPO plans for business park operator TECOM Group after Dubai Electricity and Water Authority (DEWA) raised $6.1 billion in the largest offering in the Gulf since 2019.

Dubai’s deputy ruler, Sheikh Maktoum Bin Mohammed, in November announced plans to take 10 government-linked companies public to boost stock market activity.

Last week, Bloomberg quoted sources as saying Dubai’s Salik was planning to kick off first meetings with select top investors as soon as this month, ahead of a potential IPO.

The new law also states proceeds from toll gates, including fees and fines, will be transferred to the company, as per the concession contract signed between Roads and Transport Authority and Salik.

Existing toll gates in Dubai can be removed or modified subject to a decree while new toll gates can also be added, it noted.

Salik, Arabic for open, is an automated system introduced in 2007. Each time a vehicle passes through one of the city’s eight toll points, AED4 ($1.09) is charged to a prepaid account – eliminating the need for cash or toll booths.

Pursuant to the law, Salik is exclusively authorised to operate, manage and develop the traffic toll system in Dubai. 

The company’s board of directors will consist of a chairman and vice chairman, in addition to board members. The board serves for a period of three years.

The new law also permits the transfer of some staff from the RTA to the new entity.