Utility’s share pop turns on Dubai’s IPO pipeline | Reuters
Interest rates might be rising but some utilities still look red hot. An initial public offering of Dubai Electricity and Water Authority (DEWAA.DU) (DEWA) jumped 20% on its first trading day on Tuesday, valuing the company at 149 billion dirhams ($40.6 billion). The deal, triple the original size and priced at the top end of its indicative price range, raised $6.1 billion for its owner, the Dubai government. There’s further room to run, too.
Even after the strong start, DEWA’s enterprise value looks cheap relative to regional and European rivals. At 12.7 times the EBITDA it is expected to generate in 2022, European and Gulf-based water and energy providers including Snam (SRG.MI), Elia (ELI.BR), National Grid (NG.L), United Utilities (UU.L), Tabreed (TABR.DU) and Qatar Fuel (QFLS.QA) trade on an average 14 times. What’s more, its 5% dividend yield is higher than the 3.6% average of those peers, and a heavy presence of foreigners amongst DEWA’s customers means it’s easier for it to raise prices as needed. The biggest public share sale for the region since Saudi Aramco’s (2222.SE) in 2019 is a win for the government looking to prime the Dubai Financial Market for more share sales, including its flag carrier Emirates.
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