Empower’s $362m Dubai IPO Book Covered in Hours

(Bloomberg) – The sale of Dubai’s stake in Emirates Central Cooling Systems Corp. received more orders than the shares on offer within hours of opening the books, with the latest example of Middle Eastern listings attracting overwhelming investor interest.

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The district cooling company, known as Empower, set the price range at 1.31 dirhams ($0.36) to 1.33 dirhams per share for the sale of 1 billion shares, a 10% stake, by Dubai Electricity & Water Authority and Emirates Power Investment, according to a statement on Monday. A message sent to investors a few hours later and seen by Bloomberg indicated that the demand exceeded the size of the transaction.

Empower’s IPO is part of Dubai’s privatization drive to boost liquidity and catch a wave of share sales in Abu Dhabi and Saudi Arabia. The emirate’s three listings this year, including DEWA’s, have raised about $7.6 billion combined.

Empower will announce the final price on November 9 and make its commercial debut on November 15. The United Arab Emirates Strategic Investment Fund, Shamal Holding and the Abu Dhabi Pension Fund are leading investors with a total commitment of up to 335 million dirhams.

The Middle East has emerged as a bright spot for IPOs amid subdued activity elsewhere, thanks to high oil prices and outperforming equity markets. Order books in the tens of billions of dollars have become commonplace as investors flock to markets across the region, with Saudi-owned utility Marafiq saying last week that its $897 million IPO had attracted $52.5 billion in orders.

With strong equity markets in the region, Dubai private school operator Taaleem Holdings PJSC said on Monday it was seeking to raise 750 million dirhams through an IPO. This is a rare private sector listing in the UAE where transactions by state-owned companies have dominated so far this year.

Empower, created almost two decades ago, is 70% owned by Dubai Electricity. The company plans to pay a minimum annual dividend of 850 million dirhams per year for two years after the IPO, and based on the offer price which implies a dividend yield of 6.4% to 6.5 %.

“Amid Dubai’s expansion plans, robust growth in residential property supply and booming hotel capacity, we believe Empower presents a unique and attractive investment proposition for all investors. “said chief executive Ahmad Bin Shafar in the statement.

Citigroup Inc., Emirates NBD Capital, Merrill Lynch International and EFG-Hermes are handling the IPO. Moelis & Co. is Empower’s independent financial advisor.

Read more:

  • Empower Said borrows $1.5 billion to fund pre-IPO dividend

  • Empower sees a minimum dividend of 850 million dirhams/year after the IPO

  • Middle East IPO momentum undeterred by global lull: ECM Watch

–With the help of Swetha Gopinath.

(Updates with terms in first two paragraphs, context in sixth.)

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