A general view of downtown in Dubai, United Arab Emirates, December 08, 2021.
Satish Kumar | Reuters
DUBAI, United Arab Emirates – Shares in Dewa, the Dubai Water and Electricity Authority, rose more than 20% on Tuesday as the giant utility began trading on the public market, marking the first listing of its kind in the region.
The shares traded at 3.02 UAE dirhams (82 cents) for the first few minutes of trading on the Dubai Financial Market Exchange, versus the IPO price of 2.48 dirhams per share. They soon pared some gains to trade at 2.88 dirhams per share by 1pm local time.
Dewa announced in March its plan to sell a 6.5% stake by offering 3.25 billion shares in its public offering. Prior to the listing, the company announced that more than 65,000 local, regional and international investors have participated in the IPO, raising approximately $6.1 billion.
The utility’s float is the largest-ever listing in the United Arab Emirates and the largest listing in the Middle East since Saudi state-owned oil giant Aramco went public on the kingdom’s Tadawul bourse in 2019.
Strong investor appetite
Dewa is the exclusive provider of water, electricity and district cooling to Dubai’s 3.5 million residents and expats.
Part of the reason for investors’ strong appetites is the company’s relatively healthy balance sheet — it had earnings of about $3.5 billion last fiscal year and is also committed to investing about $1.6 billion over the next five years. Paying out dollars in dividends to its new investors.
Another reason is the growing momentum among governments in the region to list their state-owned companies, as the Gulf States and the United Arab Emirates in particular look to diversify their economies away from oil.
“Starting with the biggest listing and such massive success – which has seen 37x more subscriptions – is something that adds quite a bit of momentum to other discussions we have in the market,” said Hamed Ali, CEO of DFM , said CNBC’s Dan Murphy Tuesday after the IPO debut.
“It also reflects investor confidence in the market, be it local liquidity or international liquidity, which we ultimately lured to the stock market.” Ali added that the result is a testament to confidence in Dubai’s capital markets infrastructure and the emirate as a whole, particularly a sense of renewed confidence following the Covid-19 pandemic.
The IPO marks a major step forward for Dubai’s capital markets – the emirate has sought to improve its sophistication, depth and retail involvement and volume in recent years as it seeks to do business not only with Abu Dhabi but also with Saudi Arabia to compete the border.
Dubai’s stock exchanges – Dubai Financial Market and Nasdaq Dubai – have lagged behind their regional peers and even witnessed two high-profile delistings since 2020 with the exit of Dubai’s major port operator DP World and park operator DXB Entertainments. In contrast, the Abu Dhabi Securities Exchange was one of the best performing regional markets over the past year.
Dewa is expected to be just one of up to 10 companies that may enter the Dubai market in the coming months, including the likes of major toll road operator Salik and possibly Emirates Group companies.