Dubai raises Empower's IPO size to 20% on strong investor demand

Selling shareholders previously raised the size of the offering to 15 per cent from 10 per cent

An Empower district cooling plant within the Dubai International Financial Centre area. Bloomberg

Dubai has increased the size of the stake being sold through an initial public offering in Emirates Central Cooling Systems Corporation (Empower) to 20 per cent, citing strong investor demand and oversubscription of shares.

The selling shareholders, Dubai Electricity and Water Authority and Emirates Power Investment, increased the size from the previous 15 per cent and will now together sell two billion shares, up from 1.5 billion earlier, Empower said on Friday.

Dewa and Emirates Power Investment will own 56 per cent and 24 per cent of Empower’s existing share capital, respectively, following the offering.

“The selling shareholders reserve the right to amend the size of the offering tranches, as well as the size of the offering, at any time prior to the end of the subscription period,” the company said in a statement.

Empower on Monday set the price for its IPO between Dh1.31 and Dh1.33 per share. The company may raise about Dh2.66 billion ($724 million) from the stake sale based on its indicated price range.

The subscription period began on October 31 and is set to close on November 7 for UAE retail investors and on November 8 for qualified institutional investors.

The final offer price is set to be announced on November 9 and Empower expects shares to begin trading on the Dubai Financial Market on November 15.

The UAE Strategic Investment Fund, Shamal Holding and the Abu Dhabi Pension Fund are cornerstone investors in the IPO, with a total commitment of up to Dh335m.

Empower's IPO is part of Dubai's plans to list 10 state-owned companies and increase the size of its financial market to about Dh3 trillion. The emirate also plans to set up a Dh2bn market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail, it said in November.

Empower was established by royal decree as a joint venture in 2003 to provide energy through its various plants to the emirate's property sector.

The company has become the world’s largest district cooling services provider. It will have 81 district cooling plants by the end of 2022 and a network that is more than 350 kilometres long, its website said.

While capital markets in the US and Europe have slumped amid inflation woes and fears of a looming recession, equity markets in the GCC and broader Mena region have had a flurry of IPOs.

Saudi Arabia-based Power and Water Utility Company for Jubail and Yanbu, better known as Marafiq, said it is pushing ahead with plans to list its shares on the Tadawul.

Borouge, the joint venture between Adnoc and Austrian chemicals producer Borealis, surged as much as 20 per cent on its first day of trading in June after raising $2bn in Abu Dhabi’s biggest listing.

The Mena region recorded a 500 per cent annual increase in the number of listings in the first six months of this year, with 24 IPOs raising $13.5bn, an EY report showed. In the second quarter of 2022, nine IPOs raised about $9bn.