Dubai: Dewa set to float 3.25b shares, will pay Dh6.2b dividends annually for five years

Dubai Electricity & Water Authority (Dewa) on Tuesday announced plans to launch initial public offering (IPO) and list the company’s shares at Dubai Financial Market as part of the government plan to boost the emirate’s stock market to Dh3 trillion.

In a statement, Dewa said it would offer 3.25 billion shares on the stock market, which it put as equivalent to 6.5 per cent of its overall worth. It did not provide an initial price for the shares.

The power utility, which is expected to start trading on the DFM by April 12, said the offering will be made available to individual and other investors as part of the UAE retail offering. In addition, professional investors and institutions outside the US can also participate in the IPO as part of the qualified investor offering.

The UAE retail offering subscription period is expected to run from March 24 to April 2 while the qualified investor offering subscription period is expected to run from March 24 to April 5. Five per cent of the offering will be reserved for offer to the Emirates Investment Authority.

The minimum subscription size for the first and third tranches has been set at Dh5,000 and any additional investments to be made in lots of at least Dh1,000. The base subscription for the second tranche has been set at Dh1 million.

"The Government of Dubai retains the right to increase the size of the offering at any time, subject to SCA approval, before the end of the subscription period," according to a Dewa statement.

Dividend policy

Addressing a press conference in Dubai, managing director and CEO of Dewa Saeed Mohammed Al Tayer said the power utility will pay dividends twice each fiscal year in April and October.

"The group expects to pay a minimum divided amount of Dh6.2 billion per annum over the next five years i-e October 2022-April 2027," he said.

The power utility senior officials such as Waleed bin Salman, executive vice-president (EVP) for business development and excellence; 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 IPO series

Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, announced in November that the government will list 10 state-owned companies on the DFM to increase the size of the stock market in the Emirate to Dh3 trillion, raise the competitiveness of bourses and encourage IPOs.

Salik toll system is expected to be next in line after the Dewa listing in April.

“Today represents a significant moment in the history of Dewa and is an important step towards achieving our vision for capital markets in Dubai. As a central component of the Dubai economy, Dewa has a critical role to play in supporting the future growth of the Emirate and its transition to a net zero economy by 2050," Sheikh Maktoum said.

For Dewa's potential new shareholders, Sheikh Maktoum said this offering is an opportunity to be part of the future of Dubai and have a stake in an organisation that has an unparalleled track record of technological innovation and operational excellence.

IPO partners

Emirates NBD Capital Limited has been appointed as the financial advisor while Moelis & Company UK LLP DIFC branch has been appointed as the independent financial advisor to Dewa.

Emirates NBD has been appointed as the lead receiving bank. Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Ajman Bank, Al Maryah Community Bank LLC, Dubai Islamic Bank, Emirates Islamic Bank, First Abu Dhabi Bank, Mashreq Bank and Sharjah Islamic Bank have been appointed as receiving banks.

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Historical moment

Al Tayer said Dewa has a very attractive financial profile and high visibility over cash flow generation and shareholder returns.

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

“We have recorded 11 per cent growth in power demand last year despite the pandemic and slowdown in global economy. The utility has a firm future plans to sustain this growth and it will be playing a key role in Dubai’s green energy transition process,” Al Tayer said.

He said Dewa has grown along with Dubai’s expanding economy, population, and world-class competitive infrastructure, emphasising the emirate’s position as a global city. The utility is therefore both integral to, and benefits from, Dubai’s past and current economic growth, he added.

“We have projects worth Dh86 billion that are planned to be commissioned in the next five years to meet the increasing demand for electricity and water in the emirate,” he said.

Strong balance sheet

Dewa and its subsidiaries, which caters to the emirate’s 3.4 million people, has assets worth up to Dh190 billion ($52 billion). It6 recorded Dh23.8 billion revenues in 2021, reflecting a compound annual growth rate of two per cent during the period of 2019-21.

The power utility reported Dh12.1 billion adjusted earnings before interest, taxes, depreciation, and amortisation in 2021 while net income stood firm at Dh6.6 billion. It has a strong balance sheet with low net debt of just Dh17.6 billion last year.

The utility company, which serves over one million customers in Dubai, has a generation capacity of 13.4 gigawatts of electricity as well as 490 million imperial gallons of desalinated water each day. It has a 70 per cent stake in Empower, the world’s largest district cooling services provider by connected capacity, with a total contracted capacity of approximately 1.6 million refrigeration tonnes.

Clean energy top priority

“Dewa has a world-class governance system and continuous record of good governance across all its operations. It is ready to meet the increasing 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,” Al Tayer said.

He said Dewa supports the Dubai Net Zero Carbon Emissions Strategy 2050 and is well-aligned to the Dubai Clean Energy Strategy 2050, which aims to provide 100 per cent of Dubai’s energy production capacity from clean energy sources by 2050.

“Looking ahead, 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 in turn will enrich lives while ensuring the happiness and wellbeing of all our stakeholders," he said.

—muzaffarrizvi@khaleejtimes.com

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