IPO of Dubai's Dewa set to raise $6.1bn in second largest ever listing in Middle East

The Government of Dubai will continue to own 82 per cent of Dewa's share capital after the IPO is completed. Pawan Singh / The National

Dubai Electricity and Water Authority will raise Dh22.41 billion ($6.1bn) from its initial public offering on the Dubai Financial Market, making it the largest listing in the Middle East since Saudi Aramco went public in 2019.

The book building and subscription process was completed on Tuesday, setting the final offer price at Dh2.48 per share by the government of Dubai in its capacity as the selling shareholder.

A total of nine billion ordinary shares, representing 18 per cent of Dewa’s issued share capital, were offered. This includes commitments from cornerstone and strategic investors amounting to approximately Dh13.8bn.

The offering, set to be the largest yet in the UAE, evoked strong interest from local and international investors and was 37 times oversubscribed (excluding cornerstone and strategic investors) with total demand amounting to Dh315bn, Dewa said in a statement on Wednesday. The company has increased the size of its listing twice this year, from 3.25 billion to 8.5 billion, and finally to nine billion, due to increased demand.

The utility is expected to commence trading on the DFM on April 12, under the symbol “DEWA”. Upon listing, it will have a market capitalisation of Dh124bn, making it the largest on the exchange.

“International demand for Dewa’s IPO is a testament of confidence in Dubai’s status as a trustworthy investment destination. Our goal is for our financial market to reflect the strength and diversity of our economy," said Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance.

Dewa, the first government entity to list on the DFM, operates as a vertically integrated multi-utility, with business activities including electricity generation, transmission and distribution, water desalination and district cooling.

Dubai's population is expected to grow to 5.8 million by 2040, from 3.5 million currently and energy demand rose 11 per cent last year, nearly triple the company's estimates.

As of December 31, Dewa had a total electricity generation capacity of 13,417 megawatts and a water capacity of 526 million imperial gallons per day through eight majority-owned and operated plants.

The company reported revenue of Dh23.8bn and assets of Dh169.5bn last year. It has projects valued at about Dh86bn that are planned to be commissioned in the next five years to meet the increasing demand for electricity and water in the emirate, it said last year.

Earlier this month, Moody's Investor Services affirmed Dewa's Baa2 long-term issuer ratings after the IPO announcement, confirming that its outlook on all ratings is stable.

The stable outlook reflects Dewa's “low business risk profile and considers the significant credit linkages between Dewa and the government of Dubai”, it said.

Dewa will remain one of the few utilities in the region that does not rely on government subsidies to be profitable, it said.

Abu Dhabi Ports - $1.1 billion IPO in February 2022: AD Ports Group raised $1.1bn from its share sale to help expand its operations globally and boost growth. ADQ, one of the region’s largest holding companies, remains a majority shareholder in AD Ports Group with a 75.44 per cent stake in the listed entity. Reuters

Dewa became the first public entity to list on the Dubai Financial Market, raising Dh22.41bn in an oversubscribed share sale. The IPO of the Dubai utility in April was the largest in Europe and the Middle East since Saudi Aramco’s debut in 2019. It has a market value of about $39bn and is the largest on the exchange. AFP

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Adnoc Drilling - $1.1 billion IPO in October 2021: Adnoc Drilling’s share sale, oversubscribed more than 31 times, was the largest listing on the ADX, raising more than $1.1 billion. Adnoc maintains its majority 84 per cent stake in the company while US energy services company Baker Hughes, which entered into a strategic partnership with Adnoc Drilling in October 2018, has a 5 per cent stake, and US contract oil and gas driller Helmerich & Payne holds 1 per cent. Photo: Adnoc

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Following completion of the IPO, the Dubai Government will continue to own 82 per cent of Dewa's share capital.

Emirates Investment Authority, Abu Dhabi’s holding company ADQ, UAE Strategic Investment Fund, Multiply Group, Alpha Dhabi Partners and Investment Holdings have been confirmed as cornerstone investors in the listing.

After the IPO, Dewa intends to pay dividends twice each financial year – in April and October. A minimum dividend of Dh6.2bn per annum is expected to be paid over the next five years.

"We are very proud that this will become the largest ever IPO in the UAE and the largest in the Europe, Middle East and Africa region so far in 2022," Saeed Al Tayer, managing director and chief executive of Dewa, said.

"This level of interest is not only indicative of Dewa’s status as a world-class provider of utilities but also underlines the attractiveness of Dubai as a global capital market. As we look ahead, Dewa will remain focused on creating value for all its stakeholders by meeting the increasing demand for electricity and water in Dubai and by supporting the Emirate’s energy transition to net zero by 2050.”

Dubai announced plans in November to list 10 state-owned companies to increase the size of its financial market 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.