Dubai: Empower will confirm the stock offer price on November 9 and go through for a DFM listing on November 16, as another of Dubai’s government entities revises its status to be a ‘public joint stock company’. The world’s largest district cooling service provider, Empower holds an 80 per cent share in Dubai, and confirmed the next growth-seeking moves could take it into some of the other Gulf markets.
In Egypt, Empower - which 'cools' the Palm island, Business Bay and Meydan, among others - had been invited to participate in tenders, but no decision has been taken. For the IPO investors, what matters will be the company’s entrenched Dubai presence. “We have a highly visible income stream, a predictive cash flow, and solid balance-sheet,” said an Empower spokesperson. “We will be adding another 370,000 RT (refrigerated tonnes) to our capacity in the immediate term from existing master-developers to the existing 1.6 million RT from 81 district cooling plants in Dubai.”
In the medium-term, Dubai intends to have 40 per cent of its cooling needs met through district cooling services by 2030, which too will firm up Empower's place in the rankings.
The pure financials
Last year, Empower's revenues were at Dh2.46 billion and EBITDA at Dh936 million. In the first-half of 2022, the same were at Dh1.15 billion and Dh431.71 million, respectively, while the EBITDA margin hovered around 49 per cent.
So, what will the Empower offer pricing be? Market analysts reckon around the Dh2.30-Dh2.50 a share range as a strong possibility. The previous one in Dubai, Salik, had set it at Dh2 flat, and which too helped it get off to a rousing start on listing day. DEWA had its at Dh2.48 and Tecom Group went for Dh2.67. Empower, in which DEWA holds 70 per cent, plans to issue twice-a-year dividends totalling a 'minimum' Dh850 million for first two years.
Empower's path to a DFM listing on November 16:
- The UAE retail offer subscription period will run from October 31 to November 7, with 'qualified investors' subscription period to run from October 31 to November 8.
- This is a secondary offering with DEWA and Emirates Power expecting to sell 7% and 3% of the total issued share capital, respectively. Empower will not receive any proceeds from the offer. Subject to the size of the offering not being increased, the selling shareholders - DEWA and Emirates Power - will hold a stake of 63% and 27% respectively.
The other shareholder in Empower is Emirates Power Investment, an 'indirectly wholly owned subsidiary of Dubai Holding'.
Through the stock sale, DEWA will sell 7 per cent and Emirates Power 3 per cent. "At the heart of Empower’s strategy is supporting Dubai’s energy transition; by providing access to sustainable cooling solutions and increased energy efficiency, better water efficiency, and encouraging responsible energy consumption," said Saeed Mohammed Ahmad Al Tayer, Chairman of Empower.
Of the debt in its books, Empower has a 'moderate leverage profile', and the group has 'considerable headroom in its borrowing capacity, supported by the highly predictable cash flows, to continue delivering both organic and inorganic capacity growth. "The Group believes will result in a high growth earnings profile and attractive dividend pay-outs," it said in a statement.
“With a targeted market share of 80 per cent in Dubai by the end of 2022, Empower supports as well as benefits from the city’s fast-paced economic growth," said Ahmad Bin Shafar, CEO. "This includes mega-trends such as expansion in infrastructure, a rising population and hot climates, which continue to accelerate the need for more efficient and sustainable cooling at scale."