DP World Ltd., the Dubai-owned ports company with terminals from the U.K. to China, began a share sale to raise as much as $4.32 billion in what may be the Middle East's biggest initial public offering.
Investors can order shares at between $1 and $1.30 a share in the global offering, it said in a statement in Dubai today. The company is selling 2.822 billion shares, or 17 percent of its equity, and may sell another 498 million shares, or 3 percent.
``This indicative price range reflects DP World's strong reputation internationally and confidence in its future,'' Jamal Majid bin Thaniah, executive vice-chairman, said in the statement.
DP World, the fourth-biggest container port company, said Oct. 21 it will sell about 20 percent of its stock to repay $3.5 billion of Islamic bonds, provide cash to the government and spur interest in the Dubai International Financial Exchange. The IPO follows Dubai's purchase of stakes in Nasdaq Stock Market Inc. and London Stock Exchange Group Plc as it vies with Qatar and Bahrain to be the region's dominant financial center.
The state-owned Dubai Exchange will be renamed following Borse Dubai's September deal with the U.S. company. DP World shares are scheduled to list on the bourse Nov. 26. A quarter of the shares on offer in the IPO will be used to repay holders of its Islamic bond.
The IPO is open to companies and resident citizens of six Persian Gulf countries, foreigners living in the United Arab Emirates and institutional investors globally. The offering for retail investors closes Nov. 15 and institutional investors have until Nov. 20 to submit bids.
The offer price will be announced on Nov. 21. The IPO may surpass the Middle East's biggest initial offering yet, Saudi Telecom Co.'s 2003 offering that raised $4.1 billion. That sale was open only to Saudi investors.
A sale of 3.32 billion shares at the top end of the price range would value the company at $21.6 billion. The price range of $1 to $1.3 a share implies an enterprise value-to-estimated 2008 earnings before interest, taxes, depreciation and amortization, or Ebitda of 15 to 19.4, Justin Anstee, Merrill Lynch & Co.'s head of infrastructure, told reporters in Dubai today.
Deutsche Bank AG, Merrill Lynch, Shuaa Capital PSC and Dubai Islamic Bank PJSC's Millennium Finance Corp. unit are managing the share sale for DP World.
``This is a global company, with operations in 22 countries across six continents which has consistently grown at twice the market rate,'' Yuvraj Narayan, DP World's chief financial officer, told reporters on the sidelines of the news conference. Its presence in the emerging markets of Africa, Latin America, Asia and the Middle East will ensure future earnings growth, he said.
DP World's operating profit is forecast to jump 37 percent in 2007 to $964 million and rise at a compound rate of 17 percent over the next three years to reach $1.54 billion in 2010, according to the average forecasts of the four IPO sale managers.
Container volumes handled by DP World grew 18.1 percent in 2006 to 36.8 million twenty-foot equivalent units, compared with overall market growth of 10.8 percent, Mohammad Sharaf, DP World's chief executive officer told the conference.
DP World will exercise its option of selling an additional 3 percent of its shares if demand exceeds the shares on offer and the price advances after trading. It will use surplus bids to buy back shares if the share price falls after listing.
The company, which began operations some 35 years ago with one port, acquired Peninsular & Oriental Steam Navigation Co. for $6.8 billion last year.
DP World has a ``strong'' pipeline of new projects that is expected to nearly double capacity to around 90 million TEUs in 10 years, it said in a statement, helping it catch up with rivals like Hong Kong's Hutchison Port Holdings Ltd. and Singapore's PSA International Pte.
The company's listing will be the first of a global, stand- alone ports operator, although two smaller port companies began trading earlier this month.
Hamburger Hafen & Logistik AG, owner of Germany's biggest port, jumped 17 percent on its first trading day Nov. 2 after an IPO that valued it at $5.3 billion. Its offer price indicated an enterprise value-to-Ebitda of 16.3.
Novorossiysk Commercial Sea Port, Russia's largest commercial seaport, said Nov. 2 it sold global depositary receipts at $19.20 apiece, giving it a market value of $4.9 billion. That offer price was at an enterprise value-to-Ebitda of 14.8, bankers said today. ( Bloomberg )