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Dubai: Investors heavily bought into the initial public offering (IPO) of UAE-based contractor Drake & Scull International PJSC as subscriptions amounted to 101 times the value of shares on sale.
Around 45,600 subscribers applied for about 1.2 billion shares offered in the IPO. The shares were priced at Dh1 each, plus an offering cost of two fils per share. The minimum subscription limit was 20,000 shares.
The mechanical, electrical and plumbing (MEP) contractor said yesterday it received Dh124 billion in subscription amount.
"It indicates that investors clearly see the opportunity for Drake & Scull to benefit from MEP and civil contracting services growth across the region. We would like to thank all those who have participated in the offer and look forward to creating long-term value for all our new shareholders," chief executive officer Khaldoun Rashid Tabari said in a statement.
A combination of large pool of liquidity available in the Gulf and the IPO's attractive price were behind the huge investor response, a Dubai-based analyst said.
"It is a huge subscription amount by any standard. The response shows that there is a strong demand for a well-priced IPO. Such oversubscriptions were common [to any IPO] in 2005 and 2006, but now investors have become smarter and know when there is a good IPO," said Emad Ghandour, executive director of Gulf Capital.
The company also benefited from its track record in a key sub-sector of the booming construction industry, he added.
The IPO, which closed on July 17, represented 55 per cent of the company. It was open to both UAE nationals and foreigners along with institutional subscribers.
Drake & Scull will be capitalised at about Dh2.18 billion and its shares are scheduled to be listed on the Dubai Financial Market (DFM) in the third quarter.
"Local, regional and international subscribers will be notified of the total amount of offer shares allocated to them starting July 31," the company said.
The start of the allotment and refund process will also start on the same day. Each subscriber will receive a personalised allocation notice by post with an invitation to attend the constitutive general assembly meeting, the company said.
Al Mal Capital and HSBC Middle East are the joint lead managers for the IPO.
1.2b shares offered
- Around 45,600 subscribers applied for about 1.2 billion shares offered in the IPO.- The shares were priced at Dh1 each, plus an offering cost of two fils per share.- The minimum subscription limit was 20,000 shares.- The IPO, which closed on July 17, represented 55 per cent of the company.- It was open to both UAE nationals and foreigners along with institutional subscribers.- Drake & Scull will be capitalised at about Dh2.18 billion.
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