Emirates Central Cooling Systems Corp. has taken out a Dh5.5 billion ($1.5 billion) loan to help pay a special dividend ahead of its initial public offering, people familiar with the matter said.
The district cooling firm, known as Empower, has borrowed the money from Emirates NBD Bank PJSC to optimize its capital structure, according to the people, who asked not to be identified discussing private information. Emirates NBD is expected to invite other lenders to participate in the loan, one of the people said.
Existing Empower shareholders Dubai Electricity and Water Authority and Emirates Power Investment have been paid Dh2.9 billion in dividends, according to a presentation on the company's website. Details on the loan's tenure and pricing, as well as what Empower will use the rest of the funds for, couldn't immediately be learned.
Established almost two decades ago, Empower is looking to raise as much as $700 million in a Dubai initial public offering that could come as soon as next week, people said. It will become Dubai's latest privatisation in a push by the emirate to bolster its capital markets and standing as a financial center.
Empower is 70 per cent owned by DEWA, which itself listed earlier this year. The company expects its minimum annual dividend to remain at Dh850 million for two years after its IPO.
Representatives for Empower and Emirates NBD didn't respond to requests for comment.
Surging oil prices and investor inflows have helped drive an IPO boom in the Gulf, even as repeated bouts of volatility, inflation and plunging stock markets nix listings elsewhere in the world. The Middle East is headed for its second-best year for IPOs after 2019, which included the record Saudi Aramco float.
Empower expects capital expenditure in the range of Dh700 to Dh800 million for 2022, according to the presentation. This excludes the acquisition of 85 per cent of the Dubai Airports' district cooling assets and spending on the company's headquarter building.