Dewa shares surge on Dubai Financial Market debut after IPO

The utility says its 2021 net profit jumped about 75% amid rising demand for electricity in the emirate

Saeed Al Tayer, managing director and chief executive of Dewa, rang the market opening bell. Photo: Dewa

Shares of Dubai Electricity and Water Authority surged about 23 per cent as the utility made its debut on the Dubai Financial Market on Tuesday.

The company's shares closed 15.73 per cent higher on the first day of trading at Dh2.87 per share, after rising as high as Dh3.05 compared to the listing price of Dh2.48. Dewa has a market value of about $39 billion and is the largest on the exchange.

The listing of the Dubai utility is the largest in Europe and the Middle East since Saudi Aramco’s debut in 2019. Dewa raised Dh22.41bn ($6.1bn) from its initial public offering earlier this month.

“Today’s listing on the Dubai Financial Market is the beginning of an exciting new chapter in Dewa’s growth story," said Saeed Al Tayer, managing director and chief executive of Dewa.

"The strong interest we have seen from institutional and retail investors reflects the confidence in Dewa as a globally leading utilities company. We are proud to be able to offer investors the opportunity to be a part of Dewa’s future as it supports Dubai’s growth and energy transition.”

A total of nine billion ordinary shares, representing 18 per cent of Dewa’s issued share capital, were offered at Dh2.48 a share. This includes commitments from cornerstone and strategic investors amounting to about Dh13.8bn.

The offering garnered strong interest from local and international investors and was 37 times oversubscribed (excluding cornerstone and strategic investors) with total demand amounting to Dh315bn, the utility said.

The company increased the size of its listing twice this year, from 3.25 billion to 8.5 billion, and finally to nine billion shares, because of robust demand.

Dewa has outweighed Emirates NBD, Dubai's largest bank, which before its listing had 23.63 per cent weight on DFM General Index with a market capitalisation of Dh92.85bn.

Dewa's listing gives "a strong impetus to DFM’s diversification strategy that focuses on attracting IPOs and listings from varied economic sectors", said the bourse's chairman Helal Al Marri. "Our ultimate objective is to increase the representation of dynamic economic sectors that play a pivotal role in the economy of Dubai and the UAE."

Dewa is the first of 10 state-owned companies that will eventually list on the DFM as Dubai seeks to increase the size of its financial market to Dh3 trillion. In November, the emirate also announced 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.

The next entity expected to be listed on the DFM is the Salik toll system, officials said last year.

On Tuesday, Dewa said its 2021 profit surged almost 75 per cent to about Dh7bn as demand for electricity rose in the emirate and economy continues to recover strongly from the pandemic driven slowdown.

“The year 2021 witnessed strong demand growth for electricity of over 10 per cent, which is reflected in our excellent performance,” Dewa said in a statement to the DFM. “We view this as return to normal situation in Dubai after Covid.”

The company said revenue reached Dh23.8bn and assets at the end of 2021 climbed to Dh169.5bn. As of December 31, Dewa had a total electricity generation capacity of 13,417 megawatts and a water capacity of 490 million imperial gallons per day through eight majority-owned and operated plants.

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.

Dewa operates as a vertically integrated multi-utility, with business activities including electricity generation, transmission and distribution, water desalination and district cooling. Demand for electricity is expected to surge in the emirate as Dubai's population is expected to grow to 5.8 million by 2040 from 3.5 million currently, which bodes well for the company's future earnings.

The Dubai Electricity and Water Authority sustainable office building in the Al Quoz. Dewa raised $6.1bn in the world’s second-biggest initial public offering this year. Bloomberg

"As one of the cornerstone investors, we are excited about what the future holds for one of the region’s leading fully integrated utilities companies, especially its strategy for energy transition to net zero by 2050," said Samia Bouazza, chief executive at Multiply Group, which has invested $100 million in Dewa.

"We remain confident that our investment will generate substantial, long-term value for our shareholders.”

The company 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 believe that the Dewa offering will reignite activity on the DFM and the strong investor appetite is testament to the interest of all investor types in the DFM and the overall Dubai growth story,” said Mohamed Fahmi, co-head of Investment Banking at EFG Hermes.

“With a healthy pipeline of IPOs lined up, the UAE boasts numerous and diverse investment opportunities ... and we’re expecting it to become a regional hub for investors in the near future.

Notable listings in the UAE over the past year - in pictures

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  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

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  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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  Yahsat – $730.6 million in July 2021: a unit of Mubadala Investment Company, it raised about $731m from its initial public offering last July. It sold 975.9 million shares, or 40 per cent of equity, through the IPO, which was several times oversubscribed, with significant demand from both qualified institutional and retail investors in the UAE. Photo: Mubadala Investment Company

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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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  Fertiglobe- $795 million in October 2021: a joint venture between Adnoc and Netherlands-listed OCI, raised about $795m in its initial IPO last year, amid strong demand from international, regional and local investors. The company — which is also the Mena region’s largest producer of nitrogen fertilisers by production capacity — sold more than 1.145 billion shares, representing 13.8 per cent of its share capital. Photo: Fertiglobe