The retail investor interest is such that DEWA's IPO will not even exert itself to reach the over-subscribed mark. Image Credit: Pixabay

Dubai: How soon will the DEWA IPO hit the ‘over-subscribed’ mark?

There are bankers and market traders who say this could happen by the end of today (March 25) itself, the second day of the subscription period that runs until April 2 for retail investors.

“From employees to businesses, we have received a massive surge of applications,” said a senior banker. “The retail demand that we are seeing is phenomenal, unprecedented.”

“Applications will most likely cross 200,000. Demand is across the board in Dubai and Abu Dhabi and we expect it to be heavily oversubscribed by (end of) today itself.”

Banks are reporting that demand for a DEWA stock allotment is such that the average loan size from a salaried individual is around Dh50,000. “This indicates a huge base level interest among UAE residents, but we are also seeing loans being taken for as much as Dh1 million by salaried account holders,” said the banker.

In recent days, banks have been using all communication channels possible to get potential investors to consider taking a loan. Some residents are drawing funds from their credit cards to put up the funds needed to subscribe. (Retail investors will be allocated 8 per cent of the total 3.25 billion shares that are being issued by DEWA. A group of high-profile institutional investors – including ADQ and Alpha Dhabi – have already parked Dh4 billion plus in the IPO as ‘cornerstone investors’.)

6.5% to more?

The IPO offer document states that offer size could be increased. If one goes only by the investor frenzy that’s been generated, such an increase is quite the possibility. Would that mean going from 6.5 per cent to 10 per cent?

A couple of Dubai-based banking sources have hinted that it has the potential to. They evaluate that if the current stake is upped to even 10 per cent, demand will continue to stay elevated, given the sheer magnitude of the offering and a price level that is attainable for a vast base of individual investors. The selling shareholder – the Dubai government – reserves the right to increase the size of the offering at any time before the end of the subscription period, Dewa said in a statement on Thursday.

This is in light of recent deals in Abu Dhabi and Riyadh, which brought in a flood of capital into their stock markets. Investors placed $126 billion in bids for the Arabian Internet & Communications Services’ $966 million IPO in Saudi Arabia in 2021. ADNOC Drilling attracted more than $34 billion of orders for its listing in Abu Dhabi.