Dewa’s IPO: Investing in Dubai’s future

The expected listing of utility giant, Dubai Electricity and Water Authority (Dewa) on the Dubai Financial Market (DFM), as part of the emirate’s plan to list a number of government-owned entities, will prove to be a turning point in Dubai’s capital market.

Dewa said on Tuesday it plans to sell a 6.5 per cent stake by offering 3.25 billion shares in its initial public offering. A price range is expected to be announced by March 24, and shares could list on the DFM by April 13, according to the company’s announcement published in Gulf News.

Shaikh Maktoum Bin Mohammad Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, last November revealed a plan to list 10 government and state-owned companies on the DFM as part of accelerating new listings in various sectors including energy, logistics and retail, and to increase the size of the stock market in the emirate to Dh3 trillion, raise the competitiveness of bourses and encourage IPOs.

A month later, Shaikh Maktoum announced the listing of Emirates Central Cooling Systems Corporation (Empower), the world’s largest District Cooling Services provider, on the Dubai bourse.

Achieving our vision

“Today represents a significant moment in the history of Dewa and is an important step towards achieving our vision for capital markets in Dubai. As a central component of the Dubai economy, Dewa has a critical role to play in supporting the future growth of the Emirate and its transition to a net zero economy by 2050,” Shaikh Maktoum on Tuesday commented on Dewa’s announcement. Investing in Dewa is “an investment in Dubai’s future,” he noted.

The offering will boost the market cap of the DFM significantly and it will also encourage other business conglomerates, especially privately-owned family businesses, to list on the market.

Family businesses in the Gulf have been reluctant to go public. But the success of state-owned companies in the region in recent years will certainly motivate them to raise funds through IPOs that would help them expand their business and target new markets.

Dewa’s IPO is widely expected to be the largest of its kind in Dubai and expected to be used to develop the company’s growing use of new storage technologies in renewable energy as well as investing in the expansion of its district cooling services in regional markets such as Saudi Arabia and Qatar.

Dewa has 13.4 gigawatts of installed electricity capacity and can produce 490 million imperial gallons of desalinated water daily. According to published figures, it had adjusted earnings of Dh12.121 billion ($3.3 billion) last year, and plans to pay a minimum dividend of Dh6.2 billion ($1.69 billion) over the next five years to future investors.

Its services will cater to a growing population from the current 3.5 million to 5.8 million by 2040, Dewa Chief Executive Saeed Mohammad Al Tayer said in a statement.

The IPO is expected to get an overwhelming response from both institutional and retail investors. And will prove a successful template for other entities. It is no doubt a bold move — one that will surely ensure Dubai’s sustainable growth.