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Empower IPO raises Dh2.66b amid huge demand; Dh1.33 per share price offered

The offering attracts $34 billion in orders from investors; Company set to become the world's largest listed district cooling services provider

Emirates Central Cooling Systems Corporation (Empower) on Wednesday said it raised Dh2.66 billion ($724 million) through initial public offering (IPO) after pricing its shares at Dh1.33 per share, the top of the indicated range.

In a statement, the Dubai-based district cooling company said its IPO was oversubscribed and attracted total bids worth Dh124.6 billion ($34 billion) as investors reposed trust in the emirate’s growing capital market. Empower will be the world’s largest listed district cooling services provider when it starts trading on the Dubai Financial Market on November 15.

The offering, which was upsized twice due to high investor interest, oversubscribed 47 times for all tranches combined at the final offer price. The qualified investor tranche attracted demand across the globe of Dh105 billion implying an oversubscription of 46 times while the retail offering saw tremendous appetite from local investors with demand collected in excess of Dh19.6 billion implying an oversubscription of 49 times.

Shareholders — Dubai Electricity and Water Authority and Emirates Power Investment, sold two billion shares — a 20 per cent stake — at Dh1.33 each. The offering size was increased to a 20 per cent stake from 10 per cent because of strong investor demand.

Saeed Mohammed Al Tayer, chairman of Empower, said the huge success of the privatisation programme so far shows that Dubai is well on its way to achieve the vision of the wise leadership to increase the total volume of its stock markets to Dh3 trillion.

“A vital part of the entire financial ecosystem is the process by which companies raise capital, including by going public. This incredible investor interest is deeply encouraging and illustrates that Dubai is a thriving dynamic international financial centre with real depth and growing demand to its capital markets,” Al Tayer said.

Empower's IPO is part of Dubai's drive to list 10 state-owned companies and increase the size of its financial market to about Dh3 trillion, as well as set up a Dh2 billion market maker fund to encourage the listing of more private companies from sectors such as energy, logistics and retail.

Dubai’s recent state-linked IPO was in September, when the emirate's toll operator Salik raised Dh3.73 billion from the sale of a 24.9 per cent stake. Tecom, another state-owned company that operates business districts in Dubai, made its debut on the DFM in early July with a Dh1.7 billion IPO in August.

Ahmad bin Shafar, chief executive officer of Empower, said this is a historic moment for both Empower and Dubai, and marks an important milestone in the Emirate’s ambition to be a leading international financial centre.

“It reflects the deep confidence of investors in the role that Empower plays in supporting the city’s fast-paced economic growth. Mega-trends such as expansion in infrastructure, a rising population and warmer climates continue to accelerate the need for more efficient and sustainable cooling at scale,” Bin Shafar said.

Empower, which was set up as a joint venture in 2003 to provide energy through its various plants to the emirate's property sector, has become the world’s largest district cooling services provider, with 84 plant rooms and a network that is more than 350 kilometres long, according to its website.

The district cooling giant has a capacity of more than 1.64 million refrigeration tonnes and serves more than 140,000 corporate and individual consumers in more than 1,252 buildings. The company retains more than a 76 per cent market share in Dubai’s district cooling sector, according to its website.

KEY TAKEAWAYS

· Overwhelming demand of Dh124.6 billion ($33.9b) for Empower shares from local, regional and international investors with books c.47x covered (including cornerstones)

· Retail tranche alone shows strong coverage levels of c.49x even though it increased to 15 per cent of the offer size

· Significant interest reflects the deep confidence of the investor community in Dubai’s long-term growth prospects and critical infrastructure

· Final offer price is set at Dh1.33 per share, which is at the top of the price range

· IPO has raised over Dh2.6 billion ($724 million)

· Empower is expected to commence trading on the DFM on November 15 2022 under the symbol ‘EMPOWER’

· The district cooling firm will have a market capitalisation of Dh13.3 billion ($3.6b)

· It will become a world’s largest listed district cooling services provider when trading starts on November 15

— muzaffarrizvi@khaleejtimes.com