The Dubai Electricity and Water Authority is looking to raise as much as Dh7.96 billion ($2.2bn) from its initial public offering, which might be Dubai's biggest listing in 15 years, as the emirate plans to double the size of its capital market.
The utility set its offering price range between Dh2.25 and Dh2.48 per share, valuing the company between Dh112.5bn and Dh124bn, which makes Dewa the largest company on the Dubai Financial Market by market capitalisation, the company said.
Dewa plans to sell a total of 3.25 billion shares, equivalent to 6.5 per cent of its existing shares, in the offering, which is set to be the biggest listing since DP World in 2007. The selling shareholder may increase the size of the offering.
Emirates Investment Authority, Abu Dhabi’s holding company ADQ, UAE Strategic Investment Fund, Multiply Group, Alpha Dhabi Partners and Investment Holdings will be cornerstone investors in the IPO, with total commitments of up to Dh4.7bn, Dewa said.
Multiply Group has applied to invest $100 million in the IPO, it said in a statement on Thursday to the Abu Dhabi Securities Exchange, where its shares are traded.
Alpha Dhabi, a subsidiary of the International Holding Company, meanwhile, plans to invest Dh367m in the Dewa IPO through its subsidiary Alpha Dhabi Partners, it said in a statement on Thursday.
“This IPO represents an opportunity for investors to participate in a unique growth story that is underpinned by the ambition of Dubai and the United Arab Emirates,” Saeed Al Tayer, managing director and chief executive of Dewa, said.
“Since announcing our intention to float on the Dubai Financial Market last week, we have received strong interest from local and international investors that recognise our determination to shape a green future for Dubai.”
All the shares being sold in the offering are held by the government of Dubai and the company will not receive any proceeds from the transaction.
The offering will be made available to individual and other investors as part of the UAE retail offering, as well as to professional investors outside the US, as part of the qualified investor offering, the company said earlier this month.
The UAE retail offering subscription period is expected to run from March 24 to April 2.
The qualified investor offering subscription period is expected to run from March 24 to April 5. The completion of the offering and admission of shares to trading on the DFM is expected on April 12, subject to market conditions regulatory approval, Dewa said.
The utility is the first government entity to sell its shares in an IPO on the DFM. In November, Dubai announced plans to list 10 state-owned companies to increase the size of the emirate's bourse to Dh3 trillion, as well as set up a Dh2bn market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.
The next entity expected to be listed on the DFM is the Salik toll system, officials said last year.
Despite subdued IPO activity in the wake of Russia's war in Ukraine that has roiled equities and commodities markets, interest in public offerings has remained strong in GCC markets. Higher oil prices and a strong economic recovery have boosted investor confidence and shored up liquidity in the UAE's capital markets.
After the offering, Dewa intends to pay dividends twice each financial year - in April and October. A minimum dividend of Dh6.2bn every year is expected to be paid over the next five years, from October to April 2027, the company said on March 15, when it announced intentions to list.
The utility expects its business to grow in tandem with Dubai's population. The number of people living in the commercial tourism and financial of the Middle East is expected to grow to 5.8 million by 2040, from 3.5 million now. Energy demand rose 11 per cent last year, nearly triple the company's estimates, Mr Al Tayer said earlier this month.
The company's adjusted earnings before interest, tax, depreciation and amortisation stood at Dh12.1bn in 2021, with net income of Dh6.6bn and net debt of Dh17.6bn.
Dewa's financial position is “very strong” and it will not require it to raise debt over the next five years, Mr Al Tayer said.
Emirates NBD is Dewa's financial adviser on the deal, while US-based Moelis & Company is the independent financial adviser.
Citigroup, Emirates NBD Capital and HSBC are joint global co-ordinators. Credit Suisse, EFG-Hermes, First Abu Dhabi Bank and Goldman Sachs are joint bookrunners.
Emirates NBD is the lead receiving bank. Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Ajman Bank, Al Maryah Community Bank, Dubai Islamic Bank, Emirates Islamic Bank, First Abu Dhabi Bank, Mashreq Bank and Sharjah Islamic Bank have been appointed as receiving banks.