Dubai: Dewa shares soar on debut, set for fast entry into FTSE index

The Dubai Electricity and Water Authority (Dewa) shares closed 15.7 per cent higher at Dh2.87 on their debut on the Dubai Financial Market (DFM) on the back of strong interest from retail and institutional investors.

As expected, the utility services provider’s shares jumped 21.7 per cent to Dh3.05 in the first couple of minutes of opening the trade on Tuesday, thanks to an overwhelming response from the investors.

After pricing its shares last week at Dh2.48 per share, Dewa sold nine billion shares in its initial public offering (IPO) to raise Dh22.3 billion, making this the largest IPO in the UAE and Europe, and the Middle East and Africa region so far in 2022.

The order book was oversubscribed 37 times, excluding cornerstone and strategic investors, as the company attracted Dh315 billion in demand for the IPO which includes sovereign wealth funds, private funds and 65,000 individual investors.

After selling 18 per cent in the public offering, the Government of Dubai owns the remaining 82 per cent of Dewa’s share capital.

After hitting Dh3 within minutes of opening trade, Dewa shares were settling much of the day around Dh2.9 per share.

Largest entity on DFM

Dewa became the largest trading entity on the Dubai bourse as its counter saw over 447.94 million shares changing hands worth Dh1.3 billion on the first day, becoming the most active stock on the bourse. It’s also the largest company on DFM with a market capitalisation of Dh124 billion.

Dewa shares accounted for nearly 71 per cent of DFM’s trading volume and over 73 per cent of its trading value on the first trading day.

However, the Dubai Financial Market General Index closed over half a per cent lower at 3,568.83 points on Tuesday.

Saeed Mohammed Al Tayer, managing director and CEO of Dewa, rang the market opening bell to celebrate the listing.

“The strong interest we have seen from institutional and retail investors reflects the confidence in Dewa as a globally leading utilities company. We are proud to be able to offer investors the opportunity to be a part of Dewa’s future as it supports Dubai’s growth and energy transition,” said Al Tayer.

Helal Al Marri, chairman of DFM, said Dewa listing gives a strong impetus to the bourse’s diversification strategy that focuses on attracting IPOs and listings from varied economic sectors.

“Our ultimate objective is to increase the representation of dynamic economic sectors that play a pivotal role in the economy of Dubai and the UAE. Additionally, the new IPO and listing clearly indicate issuers’ deep confidence towards DFM and its world-class regulations, infrastructure and services,” he said.

Hamed Ali, CEO of DFM and Nasdaq Dubai, said Dewa’s significant listing alongside other listings as part of the Government of Dubai’s plan to list 10 companies will improve the market width and depth and diversify investment opportunities.

“We are also upbeat about the outlook of IPOs and listings on DFM given our ongoing discussions with numerous companies that are seeking to expand their business supported by the growing confidence in the national economy and the widespread regulatory developments that have greatly augmented market attractiveness by offering potential issuers various listing options,” he said.

Dewa is the first public entity to go public as part of the Dubai Government’s plan to list 10 entities to improve liquidity in the market and boost the market cap to Dh3 trillion.

It plans to pay dividends twice a year to investors and the first dividend will be paid in the second half of this year by October 2022.

Dewa’s fast entry into the FTSE index

Investment bank EFG Hermes expects Dewa to be eligible for fast entry into FTSE’s emerging markets index and attract minimum inflows of $53 million (Dh194.5 million) from FTSE passive trackers and any price increase would lead directly to more inflows, Reuters said.

EFG Hermes said the IPO spurred unprecedented foreign and local investment into the market by giving them first-time access to Dubai’s burgeoning energy sector.

“We believe that the Dewa offering will reignite activity on the DFM and the strong investor appetite is testament to the interest of all investor types in the DFM and the overall Dubai growth story,” said Mohamed Fahmi, co-head of investment banking at EFG Hermes.

“With a healthy pipeline of IPOs lined up, the UAE boasts numerous and diverse investment opportunities for clients, and we’re expecting it to become a regional hub for investors in the near future,” added Fahmi.

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