Dubai considers taxi operator IPO as sector surges

Dubai Taxi Corporation

• Emirate’s RTA raised $1bn for a stake in Salik last year
• Taxi sector saw 6% rise in trips in Q1 this year to 27.3 million
• Sector predicted to grow at least 4% annually over next five years

Dubai is considering a stock market listing for its taxi operator, as the sector surges back to pre-pandemic levels and attracts local and international investment.

The emirate’s Roads and Transport Authority (RTA) is in the early stages of considering listing the Dubai Taxi Corporation (DTC) as the latest state-backed entity to list on the Dubai Financial Market, Reuters reported this week.

Last year the regulator raised $1 billion when it sold a 24.9 percent stake in Salik, the emirate’s toll operator.

Vijay Valecha, chief investment officer at Dubai-based Century Financial said a potential IPO for DTC would not surprise the market. “The overall investor sentiment in Dubai and Abu Dhabi is riding high” at the moment, he said.

• Salik profit down 4.1% despite record toll revenue
• Chauffeur firm gains UAE investor for premium Gulf service

Dubai’s taxi sector this week reported 27.3 million trips in the first quarter of this year, a 6 percent year-on-year increase and 5 percent above the same period in 2019 before operations were restricted during the Covid pandemic.

Adel Shakri, business development director at the RTA, told the UAE state news agency Wam that Dubai’s taxi sector has enjoyed “an unprecedented surge” in growth in recent years.

Founded in 1995, the DTC operates a fleet of over 5,000 cabs. It is one of more than a dozen state-owned and private taxi franchises operating in the emirate.

Taxi operators have seen competition in recent years from global ride-hailing apps such as San Francisco-headquartered Uber, which launched in Dubai in 2013. Local competitor Careem launched the year before and was bought by Uber for $3.1 billion in 2019.

Careem partnered with the RTA in August 2019 to launch Hala, a service allowing Dubai customers to book RTA taxis through the Careem app.

Careem’s success has attracted other similar operators to the market in recent years. Berlin-based chauffeur operator Blacklane launched in Dubai in 2016. In January it announced it has attracted investment from Dubai conglomerate Gargash Group, as it aimed to offer a more luxurious alternative to Careem and Uber.

Helmut Scholze, partner at consultancy firm Kearney Middle East and Africa’s automotive and transport division, said Dubai’s taxi companies had good reason to be optimistic about the future. 

He estimated that the UAE sector was forecast to grow an annual rate of more than 4 percent over the next five years.

“The supply demand gap is evident when booking e-ride hailing services during peak hour with significant price surcharges of up to 50 percent,” he said.

In April e&, the UAE telecoms operator formerly known as Etisalat, bought a $400 million majority stake in Careem, in a bid to help it develop additional revenue streams such as grocery shopping, mobile payments, food delivery and other on-demand services.

Scholze said this was a trend that was likely to continue.

“Revenues of e-ride hailing service providers will increasingly consist of non-fare income. Given the frequent use of ride hailing apps and a captive audience, they are perfect candidates for monetisation through super apps,” he told AGBI.