By
Temitope Olatunji
March 11th, 2024
Dubai is still a growing region and with its integral role as the utility provider, DEWA is in a pole position to benefit immensely from this growth, and this is billed to translate to higher profitability for the investors in the long run.
Just as in any prominent region, the Middle East is known to introduce high-growth companies into the public markets and the Dubai Water and Electricity Authority (DEWA) is one of the latest after its blockbuster Initial Public Offering (IPO) debut. From the IPO opening of 2.48 dirhams per share, DEWA shares grew by exactly 22.98% within the first five minutes to 3.03 Dhirams per share.
The DEWA IPO according to the company is oversubscribed by about 37x and prior to the offering, officials said the plan was to offer a 6.5% stake in the company to public investors, a figure that amounts to 3.25 billion shares in its public offering. Just as is obtainable in other prominent financial markets, the volatility in DEWA was modeled as the IPO price pared off its gains to just 16% of the IPO price after 30 minutes.
DEWA occupies a very pivotal position in the growth and development of the United Arab Emirates as it is the sole distributor of water, electricity, and district cooling to the more than 3.5 million residents of the Dubai area. The oversubscription is evidence of the trust in the company and the public’s willingness to become a part of the utility provider’s growth.
“The strong interest we have seen from institutional and retail investors reflects the confidence in DEWA as a globally leading utility company,” said Saeed Mohammed Al Tayer, Managing Director, and CEO of DEWA. “We are proud to be able to offer investors the opportunity to be a part of DEWA’s future as it supports Dubai’s growth and energy transition.”
The opening performance of DEWA in the public market has notably beaten analysts’ expectations that was through the roof in the weeks leading up to the IPO.
DEWA IPO and the Future of Profitability
Dubai is still a growing region and with its integral role as the utility provider, DEWA is in a pole position to benefit immensely from this growth, and this is billed to translate to higher profitability for the investors in the long run.
“We are excited about what the future holds for one of the region’s leading fully integrated utility companies, especially its strategy for the energy transition to net-zero by 2050,” said Samia Bouazza, CEO and Managing Director, Multiply Group, one of the top investors in the DEWA IPO. “We remain confident that our investment will generate substantial, long-term value for our shareholders.”
Despite the broader headwinds recorded in other Asian markets with notable selloffs across a range of stocks, the DEWA grand opening is an indication of the resilience of the company drawing on the utility it commands and the overall confidence in its long term growth prospects.
“The success of DEWA’s IPO opens the door for further privatization of government assets and makes our capital market more efficient,” said Anita Yadav, CEO of Global Credit Advisory lt.