Parkin company PJSC announces intention to float on the Dubai Financial Market

Parkin Company PJSC (“Parkin” or the “Company”), the largest provider of paid parking facilities and services in Dubai, today announces its intention to proceed with an initial public offering (the “IPO” or the “Offering”) and to list its ordinary shares (the “Shares”) for trading on the Dubai Financial Market (“DFM”).

KEY HIGHLIGHTS OF THE OFFERING

• 749,700,000 shares each with a nominal value of AED 0.02 will be made available in the Offering, representing 24.99% of Parkin’s total issued share capital

• All Shares to be offered are existing shares held by the Dubai Investment Fund as the selling shareholder (the “Selling Shareholder”) who reserves the right to amend the size of the Offering at any time prior to the end of the subscription period at its sole discretion, subject to applicable laws and the approval of the Securities & Commodities Authority (the “SCA”)

• The Offering will be made available to UAE Retail Investors and other investors as part of the UAE Retail Offering (as defined below) as well as to professional investors outside the United States, including the UAE, as part of the Qualified Investor Offering (as defined below)

• The subscription period will open on Tuesday, 5 March 2024 and is expected to close on Tuesday, 12 March 2024 for UAE Retail Investors and on Wednesday, 13 March 2024 for Qualified Investors

• The Internal Sharia Supervision Committee of Emirates NBD Bank PJSC has issued a Shariah pronouncement confirming that, in its view, the Offering is compliant with Shariah principles. Investors should undertake their own due diligence to ensure that the Offering is Shariah compliant for their own purposes

• Admission of Shares to trading on DFM (“Admission”) is expected to take place in March 2024

CAPITAL STRUCTURE AND DIVIDEND POLICY

 • The share capital of the Company, as at the date of the listing (the "Listing"), has been set at AED 60,000,000, divided into 3,000,000,000 Shares paid-in-full, with the nominal value of each Share being AED 0.02

• Following the Offering, the Company intends to pay a semi-annual dividend in April and October, with a first payment expected in October 2024 in respect of the full first half of 2024, with investors purchasing shares in the Offering eligible for the full dividend for the first half of 2024

• For full fiscal year 2024 and thereafter, the Company expects to pay a minimum dividend payout of the higher of: (i) 100% of profit for the year; and (ii) free cash flow to equity, subject to distributable reserves requirements

• This dividend policy is subject to consideration by the Board of Directors (the “Board”) of the cash management requirements of the Company’s business for operating expenses, finance costs and anticipated capital expenditures and investments

• In addition, the Company expects that the Board will also consider market conditions, the then current operating environment in the Company’s markets, and the Board’s outlook for the Company’s business and growth opportunities

Ahmed Hashem Bahrozyan, Chairman of Parkin’s Board of Directors, said: “Guided by our visionary leadership, Dubai has become one of the world’s leading cities for business, lifestyle, and innovation. Parkin’s IPO will enable us to build on and accelerate our progress in supporting these ambitions, driving the Emirate’s future success. As Dubai’s population and economy continue to grow, our company will grow with it. As a result, I am confident in Parkin’s future opportunities, delivering on our vision to become one of the leading parking providers in the world.”

Eng. Mohamed Al Ali, CEO of Parkin, added: “With its systemic role in Dubai’s transport ecosystem, now and in the future, Parkin will operate at the centre of the city’s exciting and ambitious growth plans. Powered by market leading technology with robust digital infrastructure and a highly experienced management team, we will continue to enhance and expand our ability to provide seamless, sustainable, and innovative mobility solutions and services to make every journey in Dubai a world-class experience for decades to come. As we begin this new chapter, we remain steadfast in our commitment to drive growth, delivering value to our stakeholders, and shaping the future of our industry.”

DETAILS OF THE OFFERING

The Dubai Investment Fund expects to sell 24.99% of the total issued share capital of Parkin (equivalent to a total of 749,700,000 Shares), with the Selling Shareholder retaining the right to amend the size of the Offering at any time prior to the end of the subscription period at its sole discretion, subject to applicable laws and the approval of the SCA.
The Offering will comprise of:

• A public offering (the “UAE Retail Offering”) to individual and other investors in the UAE (as defined in the UAE prospectus and referred to as “First Tranche” subscribers) and;
• An offering to professional investors and other investors in a number of countries, including in the UAE, outside the United States of America in reliance on Regulation S (the “Qualified Investor Offering” and referred to as “Second Tranche” subscribers)

Further, as part of the Qualified Investor Offering, and in accordance with both the UAE Commercial Companies Law and the Dubai Law, the following will apply:

• Five percent of the Offering will be reserved for offer to the Emirates Investment Authority (the “EIA”), and;

• Five percent of the Offering will be reserved for offer to the Pensions and Social Security Fund of Local Military Personnel (the “Fund”).

The UAE Retail Offering subscription period is expected to run from 05 March 2024 to 12 March 2024, with the Qualified Investor Offering subscription period expected to run from 05 March 2024 to 13 March 2024.

The offer price per Share (the “Offer Price”) will be determined through, and following, a book building process. Investors participating in the UAE Retail Offering will subscribe for the Shares at the Offer Price.

The completion of the Offering and Admission is currently expected to take place in March 2024, subject to market conditions and obtaining relevant regulatory approvals in the UAE, including approval of Admission to Listing and trading on the DFM.

Pursuant to an Underwriting Agreement to be entered into between the Company, the Selling Shareholder and the Joint Bookrunners prior to the Listing (the “Underwriting Agreement”), the Shares held by the Selling Shareholder shall be subject to a lock-up from the date of the Underwriting Agreement up to and including 180 (one hundred and eighty) calendar days from the Listing (the “Lock-up Period”), subject to certain permitted transfers as set out in the prospectus.

The Company shall also be subject to the Lock-up Period as set out in the prospectus. The details of the Offering will be included in an Arabic-language prospectus (the “UAE Prospectus”), alongside the English translation of the UAE prospectus, and public subscription announcement (the “Public Announcement”) with respect to the UAE Retail Offering, and in an English-language International Offering Memorandum with respect to the Qualified Investor Offering. The UAE Prospectus and the Public Announcement will be published today, and the International Offering Memorandum is expected to be published in due course. The UAE prospectus and the International Offering Memorandum will be available at www.parkin.ae/parkin-ipo.

Rothschild & Co Middle East Limited has been appointed as the Independent Financial Advisor.

Emirates NBD Capital PSC, Goldman Sachs International, and HSBC Bank Middle East Limited have been appointed as Joint Global Coordinators and Joint Bookrunners.
Abu Dhabi Commercial Bank PJSC, EFG-Hermes UAE Limited (acting in conjunction with EFG Hermes UAE LLC) and First Abu Dhabi Bank PJSC have been appointed as Joint Bookrunners.

Emirates NBD Bank PJSC has been appointed as the Lead Receiving Bank. Abu Dhabi Commercial Bank PJSC, Abu Dhabi Islamic Bank PJSC, Al Maryah Community Bank, Commercial Bank of Dubai, Dubai Islamic Bank, Emirates Islamic Bank, First Abu Dhabi Bank PJSC, Mashreq Bank and Wio Bank have also been appointed as Receiving Banks.

Neither HSBC Bank Middle East Limited nor any of its respective affiliates is responsible for participating in, marketing or managing any aspect of the UAE Retail Offering to natural persons.

The Internal Sharia Supervision Committee of Emirates NBD Bank PJSC has issued a Shariah pronouncement confirming that, in its view, the Offering is compliant with Shariah principles. Investors should undertake their own due diligence to ensure that the Offering is Shariah compliant for their own purposes.

OVERVIEW OF PARKIN

 Parkin is the exclusive public parking operator in Dubai with a natural dominant position in Dubai’s parking market. With a track record spanning almost three decades, Parkin operates technologically advanced, digitally enabled parking facilities and services at extensive and strategic locations across Dubai, providing a superior customer experience.
Parkin’s mandate is protected by a well-defined and comprehensive Concession Agreement with the RTA for a 49-year period from 2024. The Concession Agreement grants Parkin exclusive rights to operate all of the RTA’s existing and new public parking facilities.

With nearly three decades of parking management experience, the Company operates across six operating verticals: (i) public on-street and off-street parking, (ii) public multi-storey car parks (“MSCPs”), (iii) developer-owned parking lots, (iv) permits and seasonal parking subscriptions, (v) parking reservations, and (vi) rental services.

As of 31 December 2023, Parkin operated approximately 197,000 paid parking spaces in Dubai. The Company is responsible for the enforcement and issuance of fines within these parking facilities as well as the collection of fines. Parkin is a critical infrastructure in Dubai with a unique business model that is set to benefit from the Emirate’s ambitious expansion plans.

INVESTMENT HIGHLIGHTS

 • Poised to benefit from Dubai’s ambitious economic and population expansion plans

o The Dubai 2040 Urban Master Plan seeks to grow the population of the Emirate by approximately 60% by 2040 with plans to host 400+ global events and attract 25 million tourists per year by 2025

o Private cars are the dominant mode of transportation in Dubai, owing to the Emirate’s high-quality road infrastructure, low energy prices, affordable costs of ownership and low average time per rush hour compared to other global cities

o As a result, the number of registered vehicles in Dubai is expected to increase by 4% per annum on average to 2033

o In line with these growth rates, the demand for public parking in the Emirate is expected to increase by 4.8% per annum on average over the next ten years, driving 60% growth by 2033

o These trends are supported by ambitious economic plans by the Dubai Government to double the size of Dubai’s economy over the next decade

o As the largest provider of paid parking facilities and services in Dubai, Parkin is a critical infrastructure asset that will benefit from the Emirate’s continued growth and dependence on private car usage

• Natural dominant market position with exclusive right to operate all RTA’s existing and future paid public parking facilities

o Parkin is the largest provider of paid parking facilities and services in Dubai with c. 197,000 paid parking spaces in operation as of 31st December 2023

o The Company has a 100% share of Dubai’s on and off-street paid public parking market and 91% share of Dubai’s on- and off-street paid parking market

o Parkin’s 49-year Concession Agreement with the RTA gives the Company exclusive rights to operate all paid public on-street parking; off-street parking; and public multi-storey car parks (MSCPs)

o As of 31 December 2023, Parkin operates approximately 179,000 paid public parking spaces across the Emirate, 75% of which are on-street parking spaces

o Of the total paid public parking spaces, the Company operates nine MSCPs in high density areas across the Emirate with approximately 4,000 parking spaces in total

o Additionally, Parkin has seven existing contracts in place with private developers across Dubai’s footprint, managing approximately 18,000 parking spaces in total, with significant potential for expansion in existing and developing areas

o As of 31 December 2023, Parkin has three defined revenue streams, all with strong cash-conversion:

 56% of Parkin’s revenue is generated from payments on public parking, MSCP parking and private developer parking. Parking spaces are differentiated across 13 zones with tariffs determined by several factors including the location; type of parking facilities; and activity rates within that zone

 17% of Parkin’s revenue comes from seasonal cards, permits and reservation services that are paid fully upfront

 23% of Parkin’s revenue is generated from enforcement and the collection of fines with a 99% collection rate on fines issued to UAE vehicles in 2023
 Parkin’s remaining revenue comes from other services such as store rentals at MSCPs

• Fully integrated digital infrastructure, with advanced operational and technological capabilities

o Parkin offers a fully digitized parking experience across locations, parking availability, payments, permits and enforcement; delivering operational efficiencies and a superior customer experience

o Currently, c.90% of all transactions are digital

o The Company offers six payment channels: parking meters; through the RTA App; AppClip (via QR code); WhatsApp; seasonal parking cards and SMS; and four alternative payment methods: ApplePay; NOL public transport card; debit and credit cards; and cash, offering high customer flexibility.

o Parkin has implemented a robust digitized surveillance and enforcement model including the roll out of smart parking inspection scan cars; smart parking lots and MSCPs; with 100% digital and paperless fines notified and paid online

o The Company is incorporating AI built tools that estimate parking availability for customers including special categories such as EV and parking for People of Determination
o The Company’s operations are underpinned by eight fully integrated and unified IT systems owned by or licensed to Parkin, ensuring efficient operations and an enhanced customer experience, driving a customer satisfaction rating exceeding 95%

• Supported by a robust regulatory framework protected by a well-defined and comprehensive Concession Agreement

o Parkin’s 49-year Concession Agreement with the RTA gives the Company exclusive rights to operate all paid public on-street and off-street parking and public MSCPs in Dubai
o The Company also has the exclusive rights to operate and manage any new parking facilities built or acquired by the RTA

o Parkin is also the only parking provider in Dubai with the right to enforce parking fines for non-compliance

o The RTA will remain responsible for maintenance of the parking facilities and all costs in relation to any new parking facilities will be borne by the RTA, giving Parkin a capex-light business model

o Parkin will pay the RTA a quarterly concession fee equal to 20% of the Company’s revenue generated from paid public on-street and off-street parking and public MSCPs in Dubai subject to inflation-linked adjustments

o Parkin will have the right to submit requests to the RTA to accelerate the launch of new parking facilities within existing and developing areas with increased activity in Dubai
o The Concession Agreement includes a well-defined mechanism to protect Parkin against future inflation impacts, requiring the Company to formally request a tariff adjustment every two years to reflect the cumulative impact of inflation

o The Executive Council of Dubai reserves the authority to approve any requested changes in tariffs to ensure that any revisions protect investors; are aligned with Dubai’s social goals; and form a fair framework for customers

• Resilient financials delivering infrastructure-like cash flows, attractive margins, and high cash conversion allowing for attractive dividends

o Parkin’s operating model and favorable regulatory framework has translated into superior margins and strong cash conversion

o Parkin’s revenue grew by 14% from AED 686m in 2022 to AED 779m in 2023

o EBITDA grew at a higher rate of 23% from AED 337m in 2022 to AED 414m in 2023, representing a margin of 53%. Pro Forma EBITDA for 2023 was AED443m in 2023 resulting in a Pro forma EBITDA margin of 57%.

o The Company’s capex light business model resulted in superior cash conversion of 99% in 2023
o This results in a clear focus on shareholder distributions:

 Parkin has an optimised capital structure with well-structured debt obligations

 The capex-light model also means minimal capital requirements for Parkin with land ownership and maintenance responsibilities retained by the RTA

 This enables Parkin to offer attractive dividends as part of its commitment to shareholder returns

• Strong platform with significant growth potential, underpinned by multiple avenues to scale-up and diversify

o Parkin is a scalable platform that is poised to benefit from Dubai’s ambitious expansion plans through several growth initiatives

o The Company has four primary growth levers:

 With the demand for parking in Dubai expected to grow by 60% by 2033 , developing new paid public parking spaces across the Emirate to meet this demand is the Company’s key growth driver

 As the leading pioneer in parking management solutions, Parkin is actively exploring multiple opportunities to expand current agreements and establish new agreements with private developers across Dubai as the city expands

 Effectively implementing tariff optimization represents a key growth opportunity for Parkin, including reclassifying some standard tariff zones as premium tariff zones based on occupancy rates in certain areas

 Continued investment in technology that further enhances digitalization to improve operational efficiencies; encourage adoption of Parkin-owned channels; and further expand enforcement capabilities to increase customer compliance

o Parkin’s additional growth levers include:

 Expansion of commercial activities to diversify revenue streams including rentals in MSCPs to shops and other commercial service providers; offering long term customer permits to car rental companies; and offering premium parking services in high-demand areas such as valet and pre-booking facilities

 Utilizing public parking MSCPs assets to sell advertising space across the Company’s extensive parking network

 Leveraging growth in the EV sector to explore opportunities for monetization in collaboration with the RTA and Dubai Electric and Water Authority (DEWA), the exclusive provider of electricity and water services in Dubai

 Expanding the Company’s parking management services regionally and internationally in collaboration with private and public developers who would benefit from Parkin’s operational systems and technology. Expansion areas include both development communities and assets such as shopping malls; airports; and other high-traffic facilities

• Clearly defined ESG framework aligned to the RTA’s and Dubai’s sustainability ambitions

o Parkin has taken significant steps to integrate environmental, social, and governance (“ESG”) considerations into its operations, including the development of an ESG framework. Parkin’s strategy is aligned to its key stakeholder, the RTA’s ESG framework as well as Dubai’s and the United Arab Emirates’ net zero ambitions

o Parkin is committed to net zero operations by 2050 and has already rolled out initiatives including 100% solar powered charging meters; 100% paperless tickets and fines; transitioning to a hybrid vehicle fleet; and expanding smart parking inspection capabilities

o Oversight and governance of the Company’s ESG policy is handled by the Board of Directors, the Executive ESG Committee and ESG Champions. The Executive ESG Committee will maintain the Company’s ESG policy and assess the performance of the policy on an annual basis.

o The Company has taken several measures to promote and enable the transition towards sustainable mobility, including incentivizing EV adoption with 100 toll-free parking spaces for eco-friendly vehicles and plans to pilot EV charging infrastructure throughout Dubai

o Parkin is also committed to having a positive impact on the community by promoting inclusive mobility, providing free permits to People of Determination and Senior Emirati citizens, among others

o The company’s board structure comprises seven members of which three are female

o Parkin will disclose its ESG performance on an annual basis in line with the Global Reporting Initiative (GRI) requirements