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Wednesday, March 30, 2022

Arabian Business - DEWA could raise $5.7bn in listing, marking start of a ‘capital markets revolution’ in the region with the biggest IPO since Saudi Aramco

By Century Financial in Century in News

Arabian Business - DEWA could raise $5.7bn in...
Vijay Valecha, Special to Arabian Business March 30, 2022

The Dubai Electricity and Water Authority PJSC (DEWA) has exercised its right to increase the number of shares offered in its initial public offering (IPO) from 6.5 percent of its issued share capital to 17 percent of its share capital.

The decision – ratified by the UAE Securities and Commodities Authority (SCA) – marks an increase in the offering from 3.25 billion ordinary shares to 8.5 billion ordinary shares.

By nearly tripling the size of its IPO offering, DEWA could raise as much as $5.7 billion in its listing.

“This could mark DEWA’s public share sale as potentially the biggest for the region since Saudi Aramco’s and sets the stage for a healthy uptake for subsequent listings that are in the pipeline,” Vijay Valecha, the chief investment officer at Century Financial, told Arabian Business.

“The company could be valued at $34 billion, if listed at a price between AED 2.25 and AED 2.48 per share,” he added.

Saud Aramco raised almost $30 billion through its IPO in late 2019.

DEWA IPO tranches – Changes you need to know

DEWA will increase the size of the tranche reserved for qualified investors, which includes the new strategic investors, from 5.9 percent, representing 2.925 billion shares, to 16.4 percent of the company’s share capital, representing up to 8.17 billlion shares.

“The tranches for retail investors and employees will remain the same. However, the retail tranche accounts up to $199 million (AED 731 million) to $219.4 million (AED 806 million) of the overall $1.9 billion (AED 7 billion)-plus issue size, which at 11.4 percent is a sizeable proportion for retail investors to participate in the region,” Valecha added.

“Clearly, the capital markets revolution has begun in Dubai and retail investors would benefit from this as market depth and liquidity is expected to increase.”

The Government of Dubai will continue to own the majority 83 percent of the public service infrastructure and utility giant’s share capital, according to a statement shared by DEWA.

It is highly unusual for companies to increase IPOs to that extent after setting initial terms. The deal is oversubscribed even at the new size, according Bloomberg.

The subscription period for the DEWA IPO remains unchanged and will close on 2 April 2022 for UAE retail investors and on 5 April 2022 for qualified domestic and international institutional investors.

DEWA is expected to list on the Dubai Financial Market (DFM) on or around 12 April 2022.

Excluding the new strategic investors, the deal including previously announced cornerstones increases from 6.5 percent to 10 percent of the company’s share capital. The size of the retail and employee tranches will remain the same.

The new offering size was determined by the Government of Dubai as the selling shareholder, following DEWA’s decision to set the offer price range per share between AED 2.25 and 2.48 per ordinary share on 24 March 2022.

This has provided investors with a highly attractive value proposition that reflects the Government of Dubai’s long-term confidence in DEWA’s growth trajectory.

The decision also reflected DEWA’s prioritisation of supporting aftermarket trading performance post-listing, the firm said in a statement.

Source:
Arabian Business