Empower may raise as much as $362 million from sale of 10% stake

IPO subscription opened on October 31 and is expected to close on November 7 for UAE retail investors and on November 8 for qualified investors

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

Dubai aims to raise up to Dh1.33 billion ($362 million) from the sale of a 10 per cent stake in Emirates Central Cooling Systems Corporation, better known as Empower, as it looks to boost the size of its capital markets.

Empower, the emirate's district cooling provider, set the price range for its initial public offering between Dh1.31 and Dh1.33 a share, implying a market capitalisation of between Dh13.1bn and Dh13.3bn at the time of listing, it said on Monday.

The Dubai Electricity and Water Authority and Emirates Power will together offer one billion shares in Empower, reserving the right to amend the size of the offering at any time before the end of the subscription period, the company said.

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

The final offer price is expected on November 9, with Empower shares expected 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 said.

Empower has received "strong interest" from investors since announcing its intention to float on the DFM, its chief executive Ahmad bin Shafar said.

"Amid Dubai’s expansion plans, a robust growth in residential real estate supply and a booming hotel capacity, we believe Empower presents a unique and attractive investment proposition for all investors," he said.

Based on the minimum dividend amount of Dh850m that will be paid in 2023, or Dh0.085 per share, the offer price range implies a dividend yield ranging from 6.4 per cent to 6.5 per cent, Empower said.

Empower's IPO is part of Dubai's plans that were announced last November to list 10 state-owned companies and increase the size of its financial market to about 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.

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, according to its website.

Empower accrued Dh1.15bn in revenue in the first half of 2022 and its earnings before interest, taxes, depreciation and amortisation stood at Dh600m during the six-month period.

At the end of 2021, Empower had a connected and contracted capacity of about 1.64 million refrigeration tonnes and 1.5 million refrigeration tonnes, respectively.

The company serves more than 140,000 corporate and individual consumers in 1,413 buildings, retaining more than a 76 per cent market share in Dubai’s district cooling sector, according to its website.