Dubai utility surges after pulling off year’s second-biggest IPO

Dubai Electricity & Water Authority jumped in its trading debut after raising $6.1bn in the world’s second-biggest initial public offering this year.

Shares of Dubai’s main utility rose 20 per cent to Dhs2.98 from the offer price of Dhs2.48, which was the top end of the marketed range. The IPO valued DEWA at $33.8bn.

The deal is the latest sign of feverish appetite for IPOs from the Gulf. DEWA almost tripled the size of its offer to 18 per cent in the face of huge demand, drawing orders worth $86bn, excluding cornerstone and strategic investors.

DEWA has successfully listed on the Dubai Financial Market, becoming the largest company on the exchange by market capitalisation!#DEWAIPO #DEWAGOESPUBLIC pic.twitter.com/RJVsWb2NGB

— DEWA | Official Page (@DEWAOfficial) April 12, 2022

Russia’s invasion of Ukraine has shuttered global IPO markets, already buckling under the weight of surging inflation and monetary policy tightening. The Middle East sidestepped the worst of the volatility, while soaring energy prices boosted cash reserves for local investors, who have been keen to put the money to work.

DEWA priced its IPO for an implied dividend yield of 5 per cent, a boon as rising interest rates make companies that provide steady income more attractive.

Dubai last year missed out on a flurry of share sales in the Middle East, led by neighbouring Abu Dhabi and Saudi Arabia, and DEWA is only the emirate’s second IPO since 2017. Now, the government is planning to list nine more state companies, including Tecom Group, in an effort to boost trading activity.

Trading volume had picked up in Dubai over the last three months of 2021, hitting a four-year high in November after a string of initiatives to bolster activity.