Dubai seeks RM1.7b from IPO of district cooling firm

DUBAI is seeking to raise US$362 million (RM1.71 billion) by selling a 10% stake in Emirates Central Cooling Systems Corp, the city’s fourth privatisation this year as part of efforts to boost trading volumes on its stock exchange.

The district cooling firm, known as Empower, set the price range for its IPO at 1.31 dirhams to 1.33 dirhams a share, according to a statement. Dubai Electricity & Water Authority and Emirates Power Investment are offering one billion shares in the IPO.

Empower will start taking investor orders from Monday, announce final pricing on Nov 9 and make its trading debut on Nov 15. The UAE Strategic Investment Fund, Shamal Holding and Abu Dhabi Pension Fund are cornerstone investors with a total commitment of up to 335 million dirhams (RM431.31 million).

Empower’s IPO is part of the government’s privatisation drive to increase liquidity and catch up with a flurry of share sales in neighboring Abu Dhabi and Saudi Arabia. Dubai’s three listings this year, including that of Dubai Electricity, have raised about US$7.6 billion combined.

On Monday, Dubai private school operator Taaleem Holdings PJSC said it is seeking to raise 750 million dirhams from an IPO, a rare private sector listing in the United Arab Emirates where deals by state-owned firms have dominated so far this year.

Empower, established almost two decades ago, is 70% owned by Dubai Electricity. The firm expects to pay a minimum annual dividend of 850 million dirhams annually for two years after the IPO, and based on the offer price that implies a dividend yield of 6.4% to 6.5%.

“Amid Dubai’s expansion plans, a robust growth in residential real estate supply and a booming hotel capacity, we believe Empower presents a unique and attractive investment proposition for all investors,” CEO Ahmad Bin Shafar said in the statement.

Citigroup Inc, Emirates NBD Capital, Merrill Lynch International and EFG-Hermes are managing the IPO. Moelis & Co is the independent financial advisor to Empower. – BLOOMBERG