Dubai district cooling company plans to sell 10% stake and list on DFM

Dubai plans to sell a 10 percent stake in Emirates Central Cooling Systems Corporation (Empower), the emirate’s district cooling provider, through an initial public offering in a bid to increase the size of its capital markets.

The Dubai Electricity and Water Authority and Emirates Power Investment (EPI) will sell a billion shares of Empower and reserves the right to vary the size of the offering, according to an advertisement in Khaleej times In Monday.

The price range of the offer will be published on October 31, the same day as the start of the offer which runs until November 7 for the first tranche reserved for retail investors and ends on November 8 for the second tranche reserved for professional investors.

Dewa and EPI will retain 90% of the company after the offer and Empower is expected to list on the Dubai Financial Market on November 16. The company plans to distribute its first dividend payment at a minimum of Dh425 million ($116 million) after for the second half of 2022 by April 2023.

Empower’s IPO is part of Dubai’s plans which were announced last November to list 10 state-owned companies and increase the size of its financial market to around 3 trillion dirhams ($817 billion), as well as create a market maker fund of 2 billion dirhams to encourage listing. more private companies in sectors such as energy, logistics and retail.

Empower was established by royal decree as a joint venture in 2003 to supply power through its various power stations to the emirate’s property sector.

The company has become the largest district cooling service provider in the world, with 84 technical rooms and a network more than 350 kilometers long, according to its website.

Empower has a capacity of over 1.64 million tons of refrigeration and serves over 140,000 businesses and individuals in over 1,252 buildings. The company retains more than 76% market share in Dubai’s district cooling sector, according to its website.

Empower is “well positioned to seize growth opportunities in Dubai thanks to its strong market position, which is expected to grow to around 80%,” it said in the newspaper’s announcement.

The company aims to “produce incremental growth by leveraging the infrastructure of existing developments to extend its network to neighboring and adjacent developments,” he said.

Empower provides its services to projects such as Deira Waterfront, Blue Waters, Jumeirah Group, Jumeirah Beach Residence, Dubai International Financial Centre, Business Bay, Dubai Healthcare City, Jumeirah Lakes Towers, The Palm Jumeirah, Discovery Gardens, Ibn Battuta Mall , Dubai Design District and Dubai Production City.

The utility plans to build on its track record of growth and acquisition and “explore further inorganic growth opportunities, both domestically and regionally in the broader Middle East region.”

Dubai’s most recent IPO was in September, when the emirate’s toll operator, Salik, raised 3.73 billion dirhams from the sale of a 24.9% stake.

Dewa raised 22.41 billion dirhams in its IPO earlier this year, making it the largest public float in the Middle East and Europe since Saudi Aramco went public in 2019.

Tecom, the operator of Dubai’s business districts, also debuted on the DFM in early July, having raised 1.7 billion dirhams in its IPO a month earlier.

The number of listings on the Mena market has increased sixfold in the first six months of this year, with 24 IPOs generating $13.5 billion, according to an EY report on IPOs of the region. In the second quarter of 2022, nine IPOs raised approximately $9 billion.

The United Arab Emirates was the largest IPO market by overall deal value, while Saudi Arabia led by volume, with five IPO deals in the first six months of the year, according to EY data.

Emirates NBD is the primary receiving bank for Empower’s IPO. Other receiving banks include Emirates Islamic Bank, First Abu Dhabi Bank, Abu Dhabi Islamic Bank, Mashreq Bank, Ajman Bank, Dubai Islamic Bank, Al Maryah Community Bank, Commercial Bank of Dubai and Bank of Sharjah.

Updated: October 24, 2022, 7:49 a.m.