Dubai sold $4.96 billion of shares in port operator DP World at the top of indicative prices, valuing the world's fourth-largest container handler at $21.58 billion in the Middle East's biggest initial public offering.
The Gulf Arab emirate priced 3.818 billion shares -- equivalent to 23 percent of the company -- at $1.30 each, at the top of a range that was as low as $1.00, DP World said in a statement on Wednesday.
The offer, the first by the government of Dubai, was 15 times oversubscribed, DP World said.
"There was strong demand for the shares internationally among institutions," DP World Chairman Sultan bin Sulayem was quoted as saying in the statement.
"DP World will have a solid base of international investors who are looking to grow value over time," he said.
Individual investors will get 10% of the shares on offer. Holders of $3.5 billion of bonds that DP World's then-owner -- Ports, Customs & Free Zone Corp -- sold last year, will get 25% and institutional investors the remainder, DP World said.
Investors had offered $100 billion in the share offer that began on November 4 and closed on Monday, United Arab Emirates-based al-Khaleej newspaper reported earlier on Wednesday.
The newspaper, the first to report the indicative price range, did not say how it got the information.
Two people familiar with the transaction told Reuters on Monday the shares would price at or close to the top of the price range.
DP World's net profit is expected to rise 55 percent next year to $564 million, $630 million in 2009 and as much as $923 million in 2011, according to research by Dubai-based Shuaa Capital, one of the four arranging banks. That values the company at 38 times expected 2008 earnings.
Dubai on Monday lifted the stake it was selling DP World by 3 percentage points on stronger-than-expected demand.
DP World, which last year bought British port operator P&O for $6.8 billion, manages 42 terminals in 22 countries.
It plans to almost double capacity to 90 million containers by 2017, expanding in countries including the UAE and China.
DP World "will record sustained growth in revenue over our forecast period, driven by regular capacity additions, continued high and even increasing utilisation of most of the operator's portfolio, and a strong price environment in terms of port tariffs," Shuaa said.
DP World's capacity will almost double by 2011 to 81 million containers per year as it expands in Dubai, Britain, Romania and Turkey, Shuaa said.
Container throughput in the Middle East, where DP World is the largest operator, should grow an average 9.6% per year for the next five years, Shuaa said, citing London-based Drewry Shipping Consultants.
Middle East economies, especially in the Gulf, are expanding as oil prices surge to records approaching $100 per barrel, almost five times as much as six years ago.
Dubai's Jebel Ali port is DP World's biggest operation, followed by China's Qingdao and India's Nhava-Sheva. (Reuters)For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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