It starts on Thursday Opening the door for subscription in Dubai Electricity and Water Authority (DEWA) shareswith a price range between 2.25 and 2.48 dirhams per share.
DEWA is looking to raise up to 8.05 billion dirhams ($2.19 billion) from the initial public offering of its shares in the largest deal of its kind in the emirate since the initial public offering of DP World shares on Nasdaq Dubai in 2007, 15 years ago.
The offering of the shares of this government facility is the first of ten planned listings of government-related companies with the aim of reviving the local Dubai Stock Exchange.
The subscription for each of the individual and institutional investors starts today at 3.52 billion shares, equivalent to 6.5% of DEWA shares. This is the first initial public offering out of ten planned for companies linked to the Dubai government, with the aim of reviving the stock exchange.
The price range was announced today, Thursday, which means that the company may raise 8.7 billion dirhams at the maximum price range, and the company’s valuation at 124 billion dirhams, according to Al Khaleej newspaper.
The subscription period for the first two tranches (individual subscribers) and the second (qualified Dubai Electricity and Water Authority employees) ends on April 2, while the subscription period for the second tranche, which is qualified investors (institutions), will end on April 5.
The results of the privatization of institutions will be announced on April 6, while the final allocation of individuals and DEWA employees will be announced on April 11.
The CEO of the authority, Sidah Al-Tayer, said that there is room to increase the size of the initial public offering from 6.5%, depending on demand and market conditions.
Dubai’s Emirates NBD is the financial advisor in the process, while US consulting firm Mollis & Co. is the independent financial advisor.
The company said Citigroup Global Markets, the investment banking arm of Emirates NBD, and HSBC were the joint global coordinators.
The company added that the book managers are Credit Suisse, EFG Hermes, First Abu Dhabi Bank and Goldman Sachs.
Financial performance
The company’s revenues last year amounted to about 23.8 billion dirhams, with a compound annual growth rate of 2% between 2019 and 2012.
Profits before financing, taxes, depreciation and amortization expenses amounted to 12.1 billion dirhams, with a net income of 6.6 billion dirhams, with a net income margin of 27.5%. The Authority’s net debt is 17.6 billion dirhams in 2021.
It added that DEWA expects to pay an annual dividend of at least 6.2 billion dirhams ($1.69 billion) over the next five years, starting on October 22, with dividends planned twice a year in April and October.
Deva
The Dubai Electricity and Water Authority – DEWA was established in 1992 as a result of the merger of the Dubai Electricity Company and the Dubai Water Department. Today, it is a world-leading integrated utility company, and the exclusive provider of electricity and water to Dubai’s 3.5 million residents and the millions of visitors it visits annually.
DEWA is a key driver of Dubai’s energy transformation efforts and focuses on building a more sustainable future for its customers and communities.
The total value of its assets, including property, facilities and equipment, is about 201 billion dirhams.
The authority’s total production capacity of electricity is currently 13.4 gigawatts, and its total production capacity from the Mohammed bin Rashid Al Maktoum Solar Energy Complex is expected to reach 5 gigawatts.
The Authority’s production capacity of desalinated water is currently 490 million gallons per day.
The authority owns a 70% stake in the Emirates Central Cooling Systems Corporation (Empower), and it also owns majority stakes in several IPP energy production projects.
The authority is also the majority owner of the Hassyan Reverse Osmosis Water Desalination Complex project.
Sheikh Maktoum bin Mohammed, the deputy ruler of Dubai, announced in November plans to list the shares of 10 government-linked companies on the stock exchange to support their activities.
These listing plans also aim to help the Dubai Financial Market to better compete with major stock exchanges in the region such as the Saudi Stock Exchange and the Abu Dhabi Stock Exchange.
Waleed Al-Khatib, managing partner at Global Stocks and Bonds Trading Company, said that the lack of a competitor to DEWA in the market and the guaranteed dividends ensure the success of the IPO in the company’s shares.
He explained that the underwriting is qualitative and what distinguishes it is the fixing of annual distributions with a return of 5%, which is important for institutions.
He stated that what distinguishes the company also is the absence of a competitor in Dubai and therefore the book value and profitability multipliers are not carefully considered, and the greater reliance in the evaluation is on distributions.
He explained that in the event of an increase in the number of individuals to subscribe, the individuals’ share of the offering may be increased by deducting part of the institutions’ share, or increasing the percentage of offered shares from 6.5% to 7% or 8%.