Dubai’s DEWA Raises $6.1 Billion in EMEA’s Biggest IPO Since 2019

(Bloomberg) -- Dubai's main power and water company raised $6.1 billion in the world's second-biggest initial public offering this year, defying a global slowdown in listings.

The government sold 9 billion shares in Dubai Electricity & Water Authority at 2.48 dirhams each, the top end of the range. That gives it a market value of $33.8 billion and makes it one of the world's biggest utilities. The stock is expected to start trading in Dubai on April 12.

DEWA almost tripled the stake it sold to 18% after initially setting out to list 6.5%. It is highly unusual for companies to increase the size of IPOs to that extent. It's the latest sign of feverish appetite for share offerings in the Persian Gulf even as deals dry up in the rest of the world.

Dubai's DEWA Boosts Retail Offer in One of Region's Biggest IPOs

Orders totaled almost $86 billion, according to the Dubai government, continuing a trend whereby Gulf IPOs have attracted tens of billions of dollars of demand from investors. Excluding cornerstone and strategic investors, the orderbook was 37 times oversubscribed.

Markets Roiled

Russia's invasion of Ukraine, rising inflation and hawkish central bank policies have roiled equity markets worldwide, causing several listings to be scuppered. But high oil prices have benefited the energy-rich Gulf, leading to strong investor inflows.

DEWA's IPO is the biggest in Europe, the Middle East or Africa since Saudi Arabian oil giant Aramco raised almost $30 billion in late 2019. It's also the largest globally since South Korea's LG Energy Solution raised $10.8 billion in January.

The deal marks a turnaround for Dubai, which missed out entirely on a boom that swept the Gulf last year. The emirate had seen just one $95 million listing since 2017.

State Listings

Dubai is trying to reinvigorate its capital markets and boost sagging trading volumes to catch up with rivals Abu Dhabi and Riyadh. The government plans to list 10 state companies, of which DEWA is the first.

The utility caters to Dubai's roughly 3.5 million residents. It has 13.4 gigawatts of power capacity and runs desalination plants. It made adjusted earnings before interest, tax, depreciation and amortization of $3.3 billion last year. It's net debt at the end of 2021 was $4.8 billion.

DEWA said it will aim to pay an annual dividend of 6.2 billion dirhams ($1.69 billion) for the next five years. The IPO pricing implies a dividend yield of 5%.

About $3.8 billion of the offering went to strategic and cornerstone investors, which included included UAE wealth funds Emirates Investment Authority and ADQ, and Abu Dhabi-based Alpha Dhabi.

Citigroup Inc., Emirates NBD Bank and HSBC Holdings Plc are managing DEWA's share sale. Credit Suisse Group AG, EFG-Hermes, First Abu Dhabi Bank and Goldman Sachs Group Inc. are also involved as bookrunners. Moelis & Co. acted as an independent financial adviser.