Dewa listing expected to revive IPO market – News

Salik and Tecom seen as possible next candidates to launch IPOs in coming months

Dewa supports the Dubai Net Zero Carbon Emissions Strategy 2050 and is well aligned with the Dubai Clean Energy Strategy 2050, which aims to provide 100% of Dubai’s power generation capacity from clean energy sources by 2050 — Photo provided

Published: Tue, March 15, 2022, 5:09 PM

The Dubai Electricity & Water Authority (Dewa) on Tuesday announced plans to launch an initial public offering (IPO) and list the company’s shares on the Dubai Capital Market as part of the government’s plan to push the stock market of the emirate to 3,000 billion dirhams.

In a statement, Dewa said it would offer 3.25 billion shares on the stock market, which it said equals 6.5% of its overall value. He did not provide an initial price for the shares.

The electric utility, which is expected to start trading on the DFM by April 12, said it would aim to pay an annual dividend of MAD 6.2 billion over the next five years.

At a press conference in Dubai, Managing Director and CEO of Dewa Saeed Mohammed Al Tayer said demand for water and electricity in Dubai will continue to trend upwards, with the population expected to rise from around 3 .5 million people today to 5.8 million people by 2040.

“Energy demand has increased by 11% in 2021, almost triple Dewa’s expectations,” he said.

Senior power utility executives such as Waleed bin Salman, Executive Vice President (EVP) for Business Excellence and Development; Khawla Al Mehairi, EVP for Strategy and Government Communication; and Yousef Jebril, EVP for Power and Water Planning; and Thomas Varghese, Chief Financial Officer, were also present on the occasion.

Dewa leads the IPO series

The power utility’s decision to go public comes as Dubai seeks to revive interest in its capital markets by listing up to 10 public entities this year.

Analysts and market experts have said road toll system Salik and business park operator Tecom are the next possible candidates to launch IPOs in the coming months. They also hinted that Emirates Group businesses, including dnata and loyalty program Skywards, as well as Dubai Airport Duty Free, are among potential brands being considered for a public offering.

Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Dubai’s deputy governor, deputy prime minister and finance minister, announced in November that the government would list 10 public companies on the DFM to increase the size of the emirate’s stock market to Dh3 trillion, increase stock market competitiveness and encourage IPOs.

“Today marks a significant moment in Dewa’s history and is an important step towards realizing our vision for capital markets in Dubai. As a central part of Dubai’s economy, Dewa has a vital role to play in supporting the future growth of the emirate and its transition to a net zero economy by 2050,” said Sheikh Maktoum.

Rethinking the future of Dubai

Devesh Mamtani, chief market strategist at Century Financial, said Dewa’s listing will be the first of the next 10 major listings on the DFM.

“Dewa is taking a proactive role in shaping Dubai’s future with a focus on energy and climate change. The listing of the leading giant will be a precursor event for trading activity on DFM and is expected to receive an overwhelming response on IPO day,” Mamtani said.

He said the listing plan was intended to help Dubai’s stock market compete more effectively with the region’s biggest stock exchanges, such as those in Saudi Arabia and neighboring Abu Dhabi.

“DFM’s growth is long overdue and Dewa’s listing will open the doors for a wave of IPOs on the exchange, such as road toll operator Salik, to increase trading volumes and improve interaction with retailers. The emirate has crafted a local stock market relaunch strategy with stellar deals in the pipeline and is ushering in the track with a dominant juggernaut,” he said.

historic moment

Al Tayer said Dewa has a very attractive financial profile and great visibility into cash flow generation and shareholder return.

While describing the IPO plan as a historic moment for Dewa as Dubai’s first government entity to go public, he said Dubai’s rapid development has led to a rapid increase in demand for electricity and electricity. ‘water.

“We experienced 11% growth in electricity demand last year despite the pandemic and the slowing global economy. The utility has firm future plans to support this growth and it will play a role key in Dubai’s green energy transition process,” said Al Tayer.

He said the company will not need to take on debt in the next five years and capital expenditure for this year will be between 8 and 9 billion dirhams.

Citigroup, Emirates NBD Bank and HSBC Holdings are handling the share sale while First Abu Dhabi Bank and Goldman Sachs Group are involved as bookrunners.

Solid balance sheet

Dewa and its subsidiaries, which cater to the emirate’s 3.4 million people, have assets worth up to 190 billion dirhams ($52 billion). It recorded revenues of 23.8 billion dirhams in 2021, reflecting a compound annual growth rate of 2% during the period 2019-2021.

The electricity utility reported an adjusted profit of Dh12.1 billion before interest, tax, depreciation and amortization in 2021, while net profit remained stable at Dh6.6 billion. It has a strong balance sheet with low net debt of just 17.6 billion dirhams last year.

The utility company, which serves more than one million customers in Dubai, has a generating capacity of 13.4 gigawatts of electricity as well as 490 million imperial gallons of desalinated water daily. It holds a 70% stake in Empower, the world’s largest district cooling service provider by connected capacity, with a total contracted capacity of approximately 1.6 million tonnes of refrigeration.

“We saw a very enthusiastic response from all over the world. There are some mishaps in Europe, but overall we don’t think it affects our program negatively,” Thomas Varghese told reporters at the event.

Absolute priority to clean energy

“Dewa has a world-class system of governance and an ongoing record of good governance in all of its operations. It is ready to meet the growing demand for electricity and water in the emirate, as the population is expected to grow from around 3.5 million people today to 5.8 million people by 2040” , said Al Tayer.

He said Dewa supports Dubai’s 2050 Net Carbon Strategy and is well aligned with Dubai’s 2050 Clean Energy Strategy, which aims to deliver 100% of power generation capacity. of Dubai from clean energy sources by 2050.

“Going forward, Dewa will support the UAE’s strategic growth ambitions by providing Dubai’s millions of residents and visitors with world-class services and innovative energy solutions. And that will in turn enrich lives while ensuring the happiness and well-being of all our stakeholders,” he said.

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