Empower Raises $724m in Oversubscribed IPO

Emirates Central Cooling Systems Corporation (Empower) has recently reported that its initial public offering (IPO) raised Dh2.66 billion ($724 million) after selling its shares at Dh1.33, the upper limit of the suggested range.
The district cooling company from Dubai announced in a statement that its initial public offering (IPO) was oversubscribed and drew bids totalling Dh124.6 billion ($34 billion) as investors put their faith in the expanding capital market in the emirate. Beginning trading on the Dubai Financial Market on November 15, Empower was the largest district cooling services supplier in the world.
The offering, which had its size increased twice due to strong investor interest, was oversubscribed 47 times for all tranches taken together at the final offer price. Demand for the qualified investor tranche reached Dh105 billion, representing a 46-time oversubscription, while local investors showed a strong interest in the retail offering, with demand exceeding Dh19.6 billion, representing a 49-time oversubscription.
Two billion shares, or 20% of the company, were sold by shareholders Dubai Electricity and Water Authority and Emirates Power Investment for Dh1.33 apiece. Due to high investor demand, the offering size was expanded from 10% to 20%.
The enormous success of the privatisation programme thus far, according to Saeed Mohammed Al Tayer, chairman of Empower, demonstrates that “Dubai is well on its approach to achieving the ambition of the wise leadership to expand the entire volume of its stock markets to Dh3 trillion”.
The method through which businesses obtain cash, especially through IPOs, is a crucial component of the whole financial ecosystem. This astounding level of investor interest is extremely energising and shows that Dubai is a flourishing, dynamic international financial hub with true depth and rising demand for its capital markets.
Empower’s IPO is a part of Dubai’s effort to list 10 state-owned businesses, grow its financial market to around Dh3 trillion, and establish a Dh2 billion market maker fund to promote the listing of more private businesses in industries like energy, logistics, and retail.
In September, Salik, the emirate’s toll operator, raised Dh3.73 billion from the sale of a 24.9% interest, marking the most recent state-affiliated IPO in Dubai. Tecom, a different state-owned organisation that manages commercial districts in Dubai, debuted on the DFM in early July and completed an IPO for Dh1.7 billion in August.
“This marks a significant turning point in history for both Empower and Dubai”, according to Ahmad bin Shafar, chief executive officer of Empower.
“It shows the strong faith that investors have in Empower’s ability to assist the city’s rapid economic expansion. Megatrends including infrastructure growth, population growth, and warming climates are accelerating the demand for more effective and sustainable cooling at scale,” according to Bin Shafar.
Empower, which was founded as a joint venture in 2003 to provide energy through its various plants to the emirate’s real estate industry, has grown to become the largest provider of district cooling services in the world, with 84 plant rooms and a network that spans more than 350 kilometres.
The massive district cooling company serves more than 140,000 businesses and individual customers in more than 1,252 locations, and it has a capacity of more than 1.64 million refrigeration tonnes.
Empower was anticipated to begin trading on November 15 on the Dubai Financial Market under the ticker “EMPOWER,” becoming the biggest publicly traded provider of district cooling services in the whole world.
Following the IPO, the Emirates Power Investment (EPI) and Dubai Electricity and Water Authority (DEWA) would keep 56% and 24%, respectively, of the current share capital of Empower.
The Empower offering was a part of Dubai’s plans to expand the size of its capital markets. The emirate also has plans to list 10 state-owned businesses and increase its financial market to about Dh3 trillion.
The demand for more effective and sustainable cooling at scale is being accelerated by megatrends like infrastructure expansion, population growth, and warming climates. Empower’s approach is focused on assisting Dubai’s energy transition by opening up sustainable cooling options, boosting energy efficiency, and promoting responsible energy use.
Empower was the fourth privatisation in Dubai, which is trying to increase trade activity and liquidity after falling behind an IPO boom that started in Saudi Arabia and its neighbouring Abu Dhabi last year. The government increased the size of two of these listings, DEWA and Salik PJSC, after they attracted strong demand, raising a total of nearly $7.6 billion from the city’s three initial public offerings this year.
Although shares of DEWA initially skyrocketed in their April trading debut, they have since dropped to about their IPO price. Due to concerns of an economic slowdown brought on by stricter monetary policy, the decrease was accompanied by volatility in the world financial markets. Salik is still well above its IPO price despite only having begun trading in late September.
Local, regional, international, and retail investors placed orders totalling $34 billion for the offering, which was over 47 times the number of shares originally offered, including the cornerstones. Empower will have 81 district cooling units and a network that is more than 350 kilometres long by the end of 2022. With a combined commitment of up to Dh335m, the Abu Dhabi Pension Fund, Shamal Holding, and the UAE Strategic Investment Fund are the IPO’s cornerstone investors.
This year, the Middle East has stood out as a promising region for initial public offerings (IPOs), in contrast to the majority of other major markets that have experienced sharp declines in activity as a result of high inflation and rising interest rates. After 2019, when Saudi Arabia’s state-owned oil company Aramco garnered $29 billion in its offering, the region is on track to have its biggest IPO earnings year ever.
Empower’s initial public offering, which could generate up to Dh2.66 billion ($724 million), was a part of Dubai’s aspirations to expand the size of its capital markets. 10 state-owned businesses will be listed by Dubai, expanding the city’s financial market to nearly Dh3 trillion. Dubai will also establish a Dh2 billion market maker fund in an effort to promote the listing of additional private businesses in industries such as energy, logistics, and retail.