Dewa’s asset portfolio will enthuse investors
CEO: PROJECTS WORTH DH86B LINED UP OVER 5 YEARS
Dubai Electricity and Water Authority (Dewa) has assets of nearly Dh200 billion and projects with a value of around Dh86 billion, its CEO said yesterday.
The projects will be commissioned in the next five years “to meet the increasing demand for electricity and water in the emirate,” said Saeed Mohammad Al Tayer, Managing Director and CEO of Dewa.
The updates on Dewa’s financial and operational status comes after the company was confirmed as the first of 10 IPOs Dubai is planning for leading government-owned enterprises. These numbers should be enough to enthuse investors eyeing the possibility of taking part in the upcoming IPO.
On Tuesday, announcing that Dewa will be the first of 10 government entities to list on the Dubai Financial Market, Shaikh Maktoum Bin Mohammad Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, said: “Investing in Dewa is an investment in Dubai’s future. Dewa is a key pillar of the development in Dubai.”
Al Tayer explained that Dewa’s success “is achieved through a clear strategy and
Dewa is a key pillar of the development in Dubai. Investing in Dewa is an investment in Dubai’s future.”
Shaikh Maktoum Bin Mohammad Bin Rashid Al Maktoum | Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance
a roadmap to transform Dubai into a centre of excellence for new technologies necessary to achieve net zero emissions and reach 100 per cent clean energy by 2050.”
Success of IPP model
Dewa has succeeded in gaining the confidence of major investors, especially in renewable and clean energy using the Independent Power Producer (IPP) model. Through this model, Dewa has attracted about Dh40 billion.
Al Tayer added: “With its portfolio of diversified projects, Dewa is transforming Dubai into a global hub for clean energy, using different disruptive technologies, with a focus on diversifying the energy mix, as we strive to improve the quality of life for all the people living in the UAE.”
He said that the listing will help Dewa expand its scope of work, contribute to providing jobs for Emiratis and support the business sector.
The airline? airport? aluminum company? Or another real estate developer? Right from Monday evening, there was intense speculation about which Dubai Government-owned enterprise will be the first to head for a stock market listing. That interest showed all through the intense trading on Tuesday when the Dubai Financial Market (DFM) shot up nearly 4 per cent as trading values rocketed past Dh1.3 billion — easily the best single-day activity in five years, according to analysts.
And then came the big announcement: Dubai chose its utility provider Dubai Electricity and Water Authority (Dewa) for the first of its planned IPOs of 10 government entities. In every aspect, Dewa’s selection to make the transition into a public limited company is befitting.
Dewa fulfils the electricity and water needs of the emirate’s residents and businesses on a 24x7 basis, and also charts out Dubai’s transition to a future anchored by renewable energy.
As Shaikh Maktoum Bin Mohammad Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Deputy Prime Minister and Minister of Finance, said: “Investing in Dewa is an investment in Dubai’s future. Dewa is a key pillar of the development in Dubai.”
By touching the lives of the more than three million people in the emirate and visitors to the city, and all of its businesses, Dewa is very much at the forefront of all activities.
DEWA HELMS DUBAI’S SUSTAINABILITY PUSH
Based on these yardsticks, Dewa was the obvious choice for the IPO push, market sources say. “Even as Dewa offers its services as a ‘traditional’ power and water company, it has been one of the biggest investors in Dubai’s push towards sustainability,” said an analyst. “The upcoming IPO’s size will be significant and Dewa will not even break into a sweat in ensuring investor interest.
“Whether it is solar power related investments or publicprivate partnerships, Dewa has been quite the innovator.”
The analyst was referring to the multi-phase Mohammad Bin Rashid Al Maktoum Solar Park, which is tipped to be the biggest ‘single-site solar park based on an IPP (independent power producer) model’. The solar park has a planned production capacity of 5,000MW and investments totalling up to a staggering Dh50 billion.
RETAIL, INSTITUTIONAL INVESTORS CAN ENTER
In his announcement, Shaikh Maktoum did not mention a date for the IPO launch. Analysts are putting their money on an early 2022 announcement, with the stock being offered to both retail and institutional investors.
“Investments in renewables like solar power requires high upfront capital expenditure,” said Sameer Lakhani, managing director at Global Capital Partners, a consultancy. “But the payback for Dewa — and its future shareholders — will be quicker and with lower costs.
With more of the city’s power needs going towards solar, the RoE [return on equity] should be higher for investors.”
As per 2020 estimates, Dewa had an installed capacity of 11,700MW for electricity and 470 MIG (million imperial gallons) of water per day. It was also the year that Dubai’s peak daily electricity use spiked 6.6 per cent in the January to August phase due to people working from home due to Covid-19. This increase was the highest since 2012.
“Dewa has reduced losses in electricity transmission and distribution networks to 3.2 per cent, compared to 6-7 per cent recorded in Europe and the US,” said Saeed Al Tayer, managing director and CEO, at the time. Dewa currently has assets of nearly Dh200 billion and projects with a combined value of around Dh86 billion, Al Tayer said yesterday. “With its portfolio of diversified projects, Dewa is transforming Dubai into a global hub for clean energy with a focus on diversifying the energy mix, as we strive to improve the quality of life for all the people living in the UAE.”
HOW MUCH OF DEWA WILL BE OFFERED AS EQUITY?
Again, it will be a while longer to get a handle on the percentage that will be offered to investors. Analysts suggest that anything between 10-20 per cent could be offered, going by what other recent high-profile listings of utility and energy associated companies achieved.
Vijay Valecha, chief investment officer at Century Financial, pointed to the overwhelming response recent IPOs in Abu Dhabi have had. Case in point being Adnoc Drilling (oversubscribed to the tune of $34 billion) and Fertiglobe, which raised $795 million as the thirdlargest listing to date on Abu Dhabi Securities Exchange.
The ADX soared past the Dh1 trillion market cap this year and is firmly entrenched at those levels.) “Premium government entities which did their primary listing in Abu Dhabi witnessed massive interest from institutional and foreign investors,” said Valecha. “The same should be the case with Dubai Government entities.
UAE NATIONALS TO GAIN
Dewa will certainly set aside a sizeable percentage for UAE nationals. Expect more action to take place on DFM in the coming weeks, as investors home in on the unprecedented push by Dubai to widen its stock market base, including Nasdaq Dubai.
Dubai wants its stock markets to touch the Dh3 trillion mark in market cap. Getting 10 of its biggest enterprises to list will immediately bring on that required depth — and in turn become a liquidity magnet.
Tapping foreign fund flows is high on the agenda “So far on DFM, real estate, telecom and, to an extent, banks have been the most actively traded stocks,” said an analyst. “With a bit of foreign investor interest, Dewa can create substantial volumes. Add another nine Dubai bluechips, and the Dh3 trillion market cap looks well within reach.”
With its portfolio of diversified projects, Dewa is transforming Dubai into a global hub for clean energy with a focus on diversifying the energy mix, as we strive to improve the quality of life for all the people living in the UAE.”
Saeed Mohammad Al Tayer | Managing Director and CEO of Dewa
Investments in renewables like solar power requires high upfront capital expenditure. But the payback for Dewa — and its future shareholders — will be quicker and with lower costs.”
Sameer Lakhani | Managing Director at Global Capital Partners
Government entities which listed in Abu Dhabi drew massive interest from institutional and foreign investors. The same should be the case with Dubai Government entities.”
Vijay Valecha | Chief investment officer, Century Financial Partners