Dubai Kicks Off IPO Rush With Landmark Listing of Utility DEWA

(Bloomberg) -- Dubai will sell a 6.5% stake in its main power and water company, kicking off an ambitious plan to list as many as 10 state firms and reinvigorate its flagging capital markets.

The emirate is pushing ahead with the initial public offering of Dubai Electricity & Water Authority even as Russia’s invasion of Ukraine roils equity markets around the world. The main bourses in the energy-rich Persian Gulf have proved resilient, in large part because of the jump in oil prices to more than $100 a barrel.

DEWA is offering 3.25 billion shares, but didn’t disclose how much money it aimed to raise. Bloomberg has previously reported the company may be valued at as much as $25 billion, making the listing one of the largest ever in Middle East’s main financial hub.

The price range for the IPO will be announced on March 24 and the shares are expected to start trading in the second week of April, according to a prospectus.

DEWA said it will aim to pay an annual dividend of 6.2 billion dirhams ($1.69 billion) for the next five years.

Recent deals in Abu Dhabi and Riyadh have attracted a flood of cash. Investors placed $126 billion in bids for Arabian Internet & Communications Services’ $966 million IPO in Saudi Arabia last year. Adnoc Drilling attracted more than $34 billion of orders for its listing in Abu Dhabi, the capital of the United Arab Emirates.

DEWA’s IPO is part of Dubai’s plan to revive trading volumes and catch up with the exchanges in Abu Dhabi and Riyadh. The emirate is also encouraging private and family-owned businesses to list. Dubai’s stock market has gained about 5% this year.

DEWA caters to Dubai’s roughly 3.5 million residents. The utility has 13.4 gigawatts of power capacity and runs desalination plants. It made adjusted earnings before interest, tax, depreciation and amortization of $3.3 billion last year. It’s net debt at the end of 2021 was $4.8 billion.

The business will grow with Dubai’s population expected to increase to 5.8 million by 2040, Chief Executive Officer Saeed Mohammed Al Tayer told reporters. Energy demand increased by 11% in 2021, almost triple DEWA’s expectation, he said.

The company won’t need to raise debt over the next five years, according to Al Tayer. Capital expenditure for this year will be around 8 billion or 9 billion dirhams. 

Citigroup Inc., Emirates NBD Bank and HSBC Holdings Plc are managing the share sale. First Abu Dhabi Bank and Goldman Sachs Group Inc. and also involved as bookrunners.

More highlights:

• UAE retail offering subscription period: March 24 to April 2
• Qualified investor offering subscription period: March 24 to April 5
• Dubai’s government retains the right to increase the size of the offering before the end of the subscription period
• The company intends to pay dividends twice each fiscal year, in April and October

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