DP World IPO - Dubai Ports World IPO
Dubai Ports World Initial Public Offering (DPW IPO)
26 November 2007 - DPW listed today. Close price was $1.36 (AED 4.99), +4.6% from IPO price, with solid trading volumes of 303 million shares worth $420 million (AED 1.54 billion). Our DIFX ticker may supply live data but is erratic at present. DP World opening price topic has charts and updates from the first day of trading. Intra-day chart for first day is below.
25 November 2007 - Some Deutsche Bank, Merrill Lynch, Rasmalla clients miss out on DPW IPO shares. DPW shares list on the DIFX 26 November 2007.
23 November 2007 - final DPW share allotment appears to be 3500 shares plus approximately 4.8% of remaining application amount (but with large reported variations). Applicants paying by direct transfer have had refunds credited to their accounts.
21 November 2007 - DP World IPO final offer price announced as $1.30 and shares 15x oversubscribed. Retail investors will get 3500 shares plus a pro rata amount. Refund checks should be in the mail by Sunday 25 November 2007.
11 November 2007 - DP World shares information added (with summary of DP World history)
On 21 October 2007, after months of speculation, the Dubai Ports World Initial Public Offering (DP World IPO or DPW IPO) was announced, with the IPO period from 04-15 November 2007, and DP World (DPW) listing on the Dubai International Financial Exchange (DIFX) on 26 November 2007.
The IPO is for 17% of DP World (2.882 billion shares) priced at $1.00-$1.30 per share, with an additional 3% (498 million shares) available as an over-allotment (greenshoe) allowance. Subscription eligibility is restricted to residents of the UAE (both Emirati and expat), and GCC nationals resident in a GCC country.
DP World is a subsidiary of Ports & Free Zone World, which is itself a subsidiary of the Dubai Government owned Dubai World. The total value of the DP World IPO will be $2.88 to $4.39 billion depending on the final share price and how many shares are issued. This makes it by far the largest IPO in the UAE, and possibly the largest in the Middle East. Previously, the largest IPO in the UAE was the AED 3.2 billion ($0.87 billion) Deyaar IPO in May 2007, at about a quarter of the size of the DP World IPO. The largest IPO in the region was AED 15 billion ($4.1 billion) raised by Saudi Telecom in 2003.
Subscribers to the DP World IPO need to be at least 21 years old, and apply in person or through an authorised representative in the UAE (one of the brokers or receiving banks).
If the DP World IPO is oversubscribed, there is a minimum allotment amount of $2000 worth of shares per applicant, with the remainder being divided up pro-rata. It is unknown how likely it is that the IPO will be oversubscribed, or by how much if it is, since this is the first IPO in the UAE of this nature. Previous UAE IPOs have been listed on one of the local markets and were heavily oversubscribed due in part to the IPO price being fixed at par value of 1 dirham per share, often undervaluing the company.
Well, the short answer is that if we knew that, we wouldn't be working for a living!
In the short term, possibly, given that all IPOs in the UAE so far have floated (first listed on a stockmarket) at a price greater than the IPO price, sometimes by a factor of several times. And the excitement generated by a number of firsts for the DP World IPO could see sufficient demand to move the price up as soon as it launches. Scroll down to see a table of recent UAE IPOs, listing prices and returns.
In the medium term (months to a couple of years) it's difficult to say as this depends more on being able to assess the value of the company and its earnings. Some earnings figures are available in the DP World prospectus, and estimates from other sources. So far, at a price of $1.00 to $1.30, the shares don't look like a bargain but this comment is based on limited information. See the DP World financial analysis topic for more comments, and the DP World 2007 H1 summary report. It seems unlikely that DP World would price their shares at such a level as to be unappealing to the large number of investors keenly interested buying into one of Dubai's successful companies.
In the long-term (more than 5 years), shares of profitable companies rise in value. The US and UK sharemarkets have increased by about 10-12% per year on average over the past century. DP World is a solid company operating in a business sector that is not going to disappear, barring any serious unusual or unforseen events, for example an ice age, meteor strike, or the availability of teleportation. Hence DP World will grow and be profitable so it would be reasonable to expect their shares to rise from the issue price at a greater rate than receiving a couple of percent on your bank deposit.
The terms of the original Dubai Ports World convertible bond say that bondholders are guaranteed 30% of the value of their stake as a share allotment in the DP World IPO.
UAE IPOs (all with IPO price of AED 1 dh, and listed on the DFM) listing in 2007 so far, close price on the first day of listing, and percentage changes from par value:
Note that DP World IPO shares will not be priced at 1 dh each, the price will be determined by the market, so you would expect the price to be indicative of a fair value for DP World. The impressive looking increases for stocks in the above table are deceptive. Oversubscription rates were so high for DFM shares (300x), for example, that even at the float price of 2.35, many investors lost money by the time they repaid loans they had taken out to leverage their IPO investment.
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