Dubai district cooling firm Empower rises in trading debut after $724 million IPO

Emirates Central Cooling Systems Corp. rose in its Dubai debut following an initial public offering that attracted $34 billion in orders, underscoring the continued appetite for listings in the oil-rich Gulf.

Empower, as the district cooling firm is known, jumped as much as 9 percent to 1.45 dirhams ($0.39), valuing it at about $4 billion. The shares later pared some gains to trade up 2.3 percent Wednesday morning.

The Gulf has been one of the world’s most active IPO markets in 2022, a year otherwise marked by deep asset-sell-offs and fears of recession. Dubai, Abu Dhabi and Saudi Arabia’s capital of Riyadh have been buoyed by oil trading near $100 a barrel and investor inflows.

Empower shareholders Dubai Electricity & Water Authority PJSC and Emirates Power Investment doubled the size of the firm’s offering to 20 percent in the face of huge demand. In all, they sold 2 billion shares at 1.33 dirhams each, the top of the pricing range, raising 2.66 billion dirhams.

Empower is Dubai’s fourth privatization in recent months as the financial hub seeks to ramp up liquidity. The IPOs have raised about $8.32 billion combined.

Still, not all companies have seen strong demand for their shares beyond their initial trading periods. DEWA jumped 16 percent in its first four days as a listed stock, but has since fallen back to around its IPO price. The decline coincided with volatility in global financial markets as economies weakened and central bank raised interest rates.

Citigroup Inc., Emirates NBD Capital, Merrill Lynch International and EFG-Hermes arranged Empower’s deal. Moelis & Co. was the company’s independent financial adviser.

Almost half of the listing proceeds in Europe, the Middle East and Africa this year come from the Arabian Gulf, as the region bucks a global downturn in initial public offering activity on the back of high crude prices and strong investor demand.

Middle Eastern IPOs have fetched $18 billion this year, representing 47 percent of the wider region’s $38.2 billion, data compiled by Bloomberg show. It’s the highest share for the Gulf on record after 2019, when Saudi oil giant Aramco went public in a $29 billion offering, the world’s largest.

While most major markets -including Europe -- have seen IPOs slump sharply from last year’s record levels because of falling stocks and high inflation, it’s been a completely different story in the Middle East.

A surge in oil prices through 2021 and the early months of this year, coupled with a rotation by investors into the region, have helped underpin listing activity. That had already started gaining steam in 2021 as governments sold stakes in companies to help fund a transition away from oil.

Stock markets in the Gulf have also held up a lot better than elsewhere, which has further boosted listing activity. Despite falling 16 percent from an April high, the MSCI GCC Countries Index is still up 2.5pc this year, compared with an 11pc drop in the STOXX Europe 600.

“GCC investors consider shares of well-known companies, especially from the public sector, as an excellent way to diversify their savings from real estate, hugely subject to swings in demand and supply, and bank deposits.