Dewa shares jump on Dubai financial market debut after IPO

Shares of Dubai Electricity and Water Authority jumped about 23 percent when the utility debuted on the Dubai Financial Market tuesday.

Dewa was trading up 16.5% at Dh2.89 on Tuesday at 11:32 a.m. UAE time after the stock hit Dh3.05 per share. The company has a market value of around $39 billion and is the largest on the stock exchange.

Dubai’s utility listing is the largest in Europe and the Middle East since Saudi Aramco’s debut in 2019. Dewa raised Dh22.41 billion ($6.1 billion) when it floated in stock market at the beginning of the month.

“Today’s listing on the Dubai Financial Market is the start of an exciting new chapter in Dewa’s growth story,” said Saeed Al Tayer, Managing Director and Managing Director of Dewa.

“The strong interest we have seen from institutional and retail investors reflects confidence in Dewa as a global utility leader. We are proud to be able to offer investors the opportunity to be part of the future of Dewa because it supports Dubai’s growth and energy transition.”

A total of nine billion common shares, representing 18 percent of Dewaof the issued share capital, were offered at Dh2.48 per share. This includes commitments from fundamental and strategic investors amounting to approximately 13.8 billion dirhams.

The offering attracted strong interest from local and international investors and was oversubscribed 37 times (excluding key and strategic investors) with total demand amounting to 315 billion dirhams, the utility said.

The company has increased its listing size twice this year, from 3.25 billion to 8.5 billion, and finally to nine billion shares, due to strong demand.

Dewa overtook Emirates NBD, Dubai’s largest bank, which prior to listing had a weighting of 23.63% on the broad DFM index with a market capitalization of MAD 92.85 billion.

Dewa’s listing gives “strong impetus to DFM’s diversification strategy which aims to attract IPOs and listings from various economic sectors”, said exchange chairman Helal Al Marri. “Our ultimate goal is to increase the representation of dynamic economic sectors that play a central role in the economy of Dubai and the United Arab Emirates.”

Dewa is the first of 10 public companies that will eventually list on the DFM as Dubai seeks to increase the size of its financial market to 3 trillion dirhams. In November, the emirate also announced plans set up a MAD 2 billion market maker fund to encourage the listing of more private companies in sectors such as energy, logistics and retail.

The next entity expected to be listed on the DFM is the Salik Toll System, officials said last year.

On Tuesday, Dewa said its profit for 2021 had jumped nearly 75% to around 7 billion dirhams as demand for electricity increased in the emirate and the economy continued to recover strongly from the slowdown caused by the pandemic.

“The year 2021 was marked by strong growth in electricity demand of more than 10%, which is reflected in our excellent performance,” Dewa said in a statement. declaration to the DFM. “We see this as a return to normal in Dubai after Covid.”

The company said revenue had reached Dh23.8 billion and assets at the end of 2021 had soared to Dh169.5 billion. As of December 31, Dewa had a total of electricity production capacity of 13,417 megawatts and a water capacity of 490 million imperial gallons per day through eight majority owned and operated plants.

It has projects valued at around 86 billion dirhams that are expected to come online over the next five years to meet the growing demand for electricity and water in the emirate, it said the year last.

Dewa operates as a vertically integrated multi-utility, with business activities such as power generation, transmission and distribution, water desalination and district cooling. Electricity demand is expected to increase in the emirate as Dubai’s population is expected to reach 5.8 million by 2040 from 3.5 million currently, which bodes well for the company’s future profits.

Dubai Electricity and Water Authority's sustainable office building in Al Quoz.  Dewa raised $6.1 billion in the world's second-largest IPO this year.  Bloomberg

“As one of the leading investors, we are excited about what the future holds for one of the region’s leading fully integrated utility companies, particularly its net-zero energy transition strategy. here 2050,” said Samia Bouazza, Managing Director of Multiply Group, which has invested $100 million in Dewa.

“We remain confident that our investment will generate substantial long-term value for our shareholders.”

The company intends to pay dividends twice per fiscal year, in April and October. A minimum dividend of 6.2 billion dirhams per year should be paid over the next five years.

“We believe the Dewa offering will reinvigorate activity on the DFM and the strong investor appetite speaks to the interest of all types of investors in the DFM and Dubai’s overall growth story,” said Mohamed Fahmi, Co-Head of Investment Banking at EFG. Hermes.

“With a healthy IPO pipeline, the UAE offers many diverse investment opportunities…and we expect it to become a regional hub for investors in the near future.

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Updated: April 12, 2022, 09:43

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