The utility is the first government entity to issue an initial public offering on the DFM and the listing will be carried out gradually due to its massive asset portfolio.
Dewa will make 3.25 billion shares available in the offering, representing 6.5 percent of its issued share capital, the company said on Tuesday. All the shares are existing shares being sold by the government of Dubai and the company will not receive any proceeds from the offering.
“Today represents a significant moment in the history of Dewa and is an important step towards achieving our vision for capital markets in Dubai,” said Sheikh Maktoum bin Mohammed, Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance.
“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. For Dewa’s potential new shareholders, 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.”
The company has the option to increase the size of the offering, depending on demand and market conditions, Dewa chief executive and managing director Saeed Al Tayer told reporters on Tuesday.
The offering will be made available to individual and other investors as part of the UAE retail offering, as well as to professional investors outside the US, including the UAE, as part of the qualified investor offering.
The UAE retail offering subscription period is expected to run from March 24, 2022, to April 2, 2022.
The qualified investor offering subscription period is expected to run from March 24, 2022, to April 5, 2022. Admission of shares to trading on the DFM is expected in April 2022.
“This is a historical moment for Dewa as the first government entity in Dubai to go public,” Mr Al Tayer said.
“Dubai’s fast-paced development has resulted in a rapid increase in the demand for electricity and water. And Dewa has grown along with Dubai’s expanding economy, population and world-class competitive infrastructure, emphasising the emirate’s position as a global city.”
Investors have shown an “enthusiastic response” so far to Dewa’s planned listing and the global market volatility triggered by the Russia-Ukraine conflict is not expected to disrupt plans to proceed with the offering, Thomas Varghese, Dewa’s chief financial officer, said.
Companies usually hold roadshows to gauge institutional investor appetite before an IPO.
“There is some disturbance in Europe but, by and large, I don’t see it affecting adversely our program,” Mr Varghese said. “Hopefully, the program will continue without any disruptions or surprises.”
Higher oil prices and a strong economic recovery have boosted investor confidence and shored up liquidity in the UAE’s capital markets.
After the offering, Dewa intends to pay dividends twice each financial year — in April and October. A minimum dividend of Dh6.2 billion ($1.7bn) per annum is expected to be paid over the next five years, from October 2022 to April 2027, the company said.
The business will grow as Dubai’s population is expected to grow to 5.8 million by 2040, from 3.5 million currently, Mr Al Tayer said. Energy demand rose 11 percent last year, nearly triple the company’s estimates.
The company’s adjusted earnings before interest, tax, depreciation and amortization stood at Dh12.1bn, with a net income of Dh6.6bn and net debt of Dh17.6bn in 2021.
Dewa’s financial position is “very strong” and it will not require it to raise debt over the next five years, Mr Al Tayer said.
Capital expenditure will hit Dh14bn in 2022 and between Dh8bn and Dh9bn in 2023, Mr Varghese told The National.
The utility “has no intention” to raise its tariffs, Mr Al Tayer said.
Emirates NBD is Dewa’s financial adviser on the deal while US-based Moelis & Company is the independent financial adviser.
Citigroup, Emirates NBD Capital and HSBC are joint global co-ordinators. Credit Suisse, EFG-Hermes, First Abu Dhabi Bank and Goldman Sachs are joint bookrunners.
Dubai announced plans in November to list 10 state-owned companies to increase the size of its financial market to Dh3 trillion ($816.7bn), as well as set up a Dh2bn market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.
The next entity expected to be listed on the DFM is the Salik toll system, officials said last year.
Dewa has diversified its sources of income through projects in the energy and water sectors, and its “strong financial performance” is backed by investment in assets worth about Dh200bn, Mr Al Tayer said last year.
“We have projects valued at around Dh86bn 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.
Dewa, which was established in 1992 after a merger between the Dubai Electricity Company and the Dubai Water Department, has a total energy generation capacity of 12.3 gigawatts and can desalinate 470 million gallons of water a day, according to its annual report released last year.
It is playing a key role in executing Dubai’s Clean Energy Strategy 2050, which aims to ensure that 75 per cent of the emirate’s energy is generated by clean sources by 2050.
The utility is currently developing the Mohammed bin Rashid Al Maktoum Solar Park, the largest single-site solar project in the world, which will have a capacity of 5,000 megawatts upon completion in 2030, with a total investment of Dh50bn.
The digital arm of Dewa also broke ground on the first phase of the largest solar-powered data center in the Middle East and Africa in December.
The carbon-neutral green center, with a capacity exceeding 100MW, will be run by Moro Hub, a subsidiary of Digital Dewa, at the Mohammed bin Rashid Al Maktoum Solar Park and will use 100 percent renewable energy.
As part of its green energy push, Dewa, which is undertaking a Dh50 million hydrogen pilot project with Germany’s Siemens Energy, is also expected to release its strategy on hydrogen this year.
The utility also opened 16 new substations in 2021 as it continues to invest in the emirate’s power infrastructure to meet future demand.
The total value of Dewa’s investments in existing and completed electricity transmission projects in 2021 reached Dh9.5bn.