Dubai's biggest IPO in 15 years seeks to raise US$2.2 billion

DUBAI'S main power and water company is looking to raise as much as US$2.2 billion in its initial public offering (IPO), in what would be the emirate's biggest listing since DP World in 2007.

Dubai Electricity & Water Authority (Dewa) plans to sell a 6.5 per cent stake, or 3.25 billion shares, at 2.25 dirhams to 2.48 dirhams apiece, valuing the firm at as much as US$33.8 billion.

The listing, which will make Dewa the biggest company on the emirate's bourse, marks the first step in Dubai's ambitious plan to reinvigorate its flagging capital markets.

The deal drew in 6 cornerstone investors, including wealth funds Emirates Investment Authority and Abu Dhabi's ADQ, which agreed to subscribe for shares worth as much as 4.7 billion dirhams (S$1.76 billion) at the offer price.

Dewa is seeking to take advantage of strong investor interest for new share offerings in the region even as equity markets around the world are roiled by Russia's invasion of Ukraine, rising inflation and hawkish central bank policies.

High oil prices have been a boon for the energy-rich Persian Gulf, however, allowing IPOs to go ahead while issuers elsewhere sit on the sidelines.

"The volatility we're seeing exists in equity markets outside our region. This is a boom time for our region," Akber Khan, a senior director at Doha-based Al Rayan Investment, said to Bloomberg Television. Khan added that he sees energy prices remaining high for several years.

Al Rayan is looking to buy into the IPO, he said.

Dubai missed out entirely on an IPO rush that swept the Middle East last year and saw offerings draw in tens of billions of dollars of demand.

To boost trading volumes and catch up with rivals Abu Dhabi and Riyadh, the city set out a plan to list 10 state-owned companies, including Dewa, in the hope that would then encourage other private and family-owned businesses to go public.

Heavily reliant on tourism and real estate, the city has seen just one US$95 million IPO since 2017, data compiled by Bloomberg show.

Meanwhile Abu Dhabi broke a 4-year listings hiatus with 3 offerings in 2021, the largest of which - Adnoc Drilling - attracted over US$34 billion in orders.

Dewa has said it will aim to pay an annual dividend of 6.2 billion dirhams for the next 5 years. The top end of the IPO pricing gives it a dividend yield of about 5 per cent.

The utility will take orders from institutional investors until Apr 5 and plans to price the shares a day later. Trading is expected to start on Apr 12.

Citigroup, Emirates NBD Bank and HSBC Holdings are managing the share sale. Credit Suisse, EFG-Hermes, First Abu Dhabi Bank and Goldman Sachs Group are also involved as bookrunners. BLOOMBERG