After raising the stake offering for ‘qualified investors, DEWA has now announced its decision to raise the IPO share size to 9.2 percent for retail investors.
Earlier this week, DEWA had raised the size of the stake offering, from 6.5 percent to 17 percent, saying the increased stake will be offered to ‘qualified investors’. At that time, retail investors were not part of that offering.
Today’s announcement puts them in the thick of the action, “Following significant demand and oversubscription from retail investors, the Government of Dubai as the selling shareholder took the decision to increase the size of the retail tranche from 260 million shares to 760 million shares,” said a statement. “This means the number of shares offered in the DEWA IPO has increased from 8.5 billion ordinary shares to 9 billion ordinary shares, which would result in a free float of 18 percent of DEWA’s share capital, with the Government of Dubai continuing to own 82 percent.”
This is the first time that DEWA has confirmed the over-subscription. According to market sources, the IPO – the biggest in Dubai in more than a decade – might have cleared the over-subscribed mark by the close of the first day of the offer period, which was on March 24, or by the second day itself.
The offer period for retail investors (and eligible DEWA employees) close tomorrow (April 2) and will be followed by the closing for institutional investors on April 5.
DEWA will then be announcing the share price, which reports say will be lost to the top end of the offered range of Dh2.25-Dh2.48 a share.
The IPO represents the first of 10 from Dubai-owned government enterprises, with the toll operator Salik being the next likely entrant to the capital markets. The DEWA offer generated significant retail buyer interest, with many taking loans or generating cash selling other assets to raise their IPO subscription funds. “Increasing the tranche for retail investors will cheer the markets as it broadens the investor base – and also allow subscribers to get better allocations,” said Sameer Lakhani, Managing Director at Global Capital Partners.
Dubai expects to create a stock market with a Dh3 trillion market cap through the steady listings of government enterprises. The move has also led many privately owned businesses to consider going public.
Gulf News had earlier reported that retail investors had pulled in family members to subscribe as well to improve their chance of getting a higher allotment of DEWA shares, which are to list on or around April 13.
“I expect the average ticket size of the subscriptions to be Dh20,000-Dh30,000 given that a majority expats taking to this IPO will be mid-income savers,” said Kunal Bilakhia of Taxpro Advisors. “It is the right opportunity for them to grow their savings at a decent return.
He further continued that they have already declared their minimum dividend policy of Dh6.2 billion, thereby, signifying a good five-year plan. Thus, if the stock price is right for any investor, they can leave earlier. However, a medium to long-term investment is advised as a good call.
