DUBAI, (Reuters) – Dubai-based contractor Drake & Skull said on Monday its 1.22 billion dirham ($332.1 million) initial public offering was more than 100 times oversubscribed as investors scramble for exposure to the Gulf’s building boom.
Drake, which specialises in mechanical, engineering and plumbing (MEP) businesses, got 124 billion dirhams of subscriptions, 101 times more than it was seeking to raise.
“Investors clearly see the opportunity for Drake and Scull to benefit from MEP and civil contracting services across the region,” Chief Executive Khaldoun Tabari said in a statement.
Economies are surging in the world’s biggest oil-exporting region after a more than six-fold rise in oil prices since 2002 triggered a construction boom.
The long-awaited Drake IPO came amid a rush of listings in the Gulf Arab region, where oil-fuelled growth in real estate and infrastructure is in stark contrast to elsewhere in the world.
Ajman Bank shares have jumped more than 35 percent since the Islamic lender started trading on Dubai’s bourse in June, while shares of Islamic insurer Takaful Emarat soared 346 percent on their debut on Sunday.
Both firms sold shares to the public this year.
“There is huge appetite in the IPO market after the performance of new listings, with gains of more than 300 percent in their first days,” said Samer al-Jaouni, general manager at Middle East Financial Brokerage Co.
“The construction sector is more attractive in terms of yields and revenues. Local players have huge liquidity that they want to invest in these sort of investments. It’s a turnaround on 2007 when appetite for IPOs was not much,” he said.
Some 45,600 subscribers applied for Drake’s shares, priced at 1.02 dirhams each in an offering that closed on July 17. Shares of Drake should begin trading on the Gulf emirate’s bourse before the end of the year.
Local, regional and global investors would be notified of their share allocations on July 31, Drake said.
Soaring demand and a shortage in housing units in the United Arab Emirates, where land prices in some areas have nearly tripled in two years, were likely to keep driving residential property prices up, HSBC said this month.
Shares of Arabtec, the UAE’s largest-listed contractor have gained almost 90 percent this year.
Drake & Scull, which has been riding a construction boom in the Gulf region, plans to use the IPO funds to buy supply firms that can deliver high-value engineering material, Qais Saleh, Drake strategic planning director, said earlier this month.
It also wants to buy contractors in the Middle East and North Africa, Saleh said.