June 2, 2023

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Dewa shares rise in Dubai in the largest IPO in the Middle East since Aramco

Dewa shares rise in Dubai in the largest IPO in the Middle East since Aramco

A general view of the downtown area in Dubai, United Arab Emirates, December 8, 2021.

Satish Kumar | Reuters

Dubai, United Arab Emirates – Shares of the Dubai Water and Electricity Authority rose more than 20% on Tuesday as the utility giant began trading on the public market, marking the first listing of its kind in the region.

Shares were traded at 3.02 UAE dirhams (82 cents) on the Dubai Financial Market in the first few minutes of trading, against the initial public offering price of 2.48 dirhams per share. They quickly pared some of the gains to trade at 2.88 dirhams per share by 1 pm local time.

Dubai Electricity and Water Authority announced in March its plan to sell 6.5% by offering 3.25 billion shares in its public offering. Prior to the listing, the company said that more than 65,000 local, regional and international investors participated in the initial public offering, raising about $6.1 billion.

The facilities flotation is the largest listing ever in the UAE and the largest in the Middle East since then Oil giant Saudi Aramco floated on the Tadawul stock exchange in Saudi Arabia in 2019.

Strong investor appetite

DEWA is the exclusive provider of water, electricity and district cooling to Dubai’s 3.5 million local and expatriate residents.

One reason for the strong investor appetite is the company’s relatively healthy balance sheet — it posted roughly $3.5 billion in adjusted earnings for the past fiscal year, and also pledged to pay about $1.6 billion in dividends over the next five years to its new investors.

Another reason is the growing momentum among governments in the region to spread their state institutions, as the Gulf states and the UAE in particular seek to diversify their economies away from oil.

Hamed Ali, CEO of DFM, said: “Starting with the largest listing and with such tremendous success – which has seen 37 times increase in subscription – is something that gives a lot of impetus to the other discussions we are having in the market.” , told CNBC reporter Dan Murphy on Tuesday after its initial public offering.

It also reflects the confidence that investors have in the market, whether it is the local or global liquidity that we ended up attracting to the stock exchange. Ali added that the result was a testament to the confidence in the capital market infrastructure in Dubai and the emirate in general, particularly the sense of renewed confidence in the wake of the COVID-19 pandemic. Saeed Mohammed Al Tayer, CEO of Dubai Electricity and Water Authority, refused to speak to CNBC shortly after the market opened despite a pre-arranged interview.

The IPO marks a huge step forward for Dubai’s capital markets – the emirate has been looking to improve its level of sophistication, depth, retail involvement and volumes over the past few years as it seeks to compete not only with Abu Dhabi but also with Saudi Arabia across the border .

Dubai’s two stock exchanges – the Dubai Financial Market and Nasdaq Dubai – have lagged behind their regional peers, even seeing two high-profile delistings since 2020 with major port operator DP World and Dubai Parks operator DXB Entertainment leaving. In contrast, the Abu Dhabi Securities Exchange was one of the best performing regional markets last year.

Dewa is expected to be just one of up to 10 companies likely to come to market in Dubai in the coming months, including companies such as major road operator Salik and possibly companies within the Emirates Group.

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