Dubai’s DEWA Falls Below IPO Price as Growth Concerns Hit Sentiment | Tech Rasta


(Bloomberg) — Shares in Dubai’s largest conglomerate fell below their initial public offering price for the first time, six months after the company raised $6.1 billion in the city’s biggest-ever listing.

Dubai Electricity and Water Authority PJSC fell as much as 2.8% to 2.47 dirhams on Wednesday, compared to the IPO price of 2.48 dirhams, as shares traded ex-dividend. More than 6.5 million shares were traded by 11:37 a.m. local time, with the average volume of the stock falling since it went public.

The shares had risen in their first April trade, reaching a peak of 2.88 dirhams a few days later. The subsequent decrease has been accompanied by the instability of the financial markets in the world due to the fear of economic recession amid a strict monetary policy. Dubai’s benchmark index is down about 5.5% since the company’s listing.

Gulf markets have been hot spots in 2022 for IPOs, with listings from the United Arab Emirates and Saudi Arabia flooding the market amid strong demand. Still, a 27% drop in oil prices from their highs in June has sent domestic rates lower, while concerns are growing that the risk-taking environment dominating global markets could spread to the Middle East.

DEWA was the first of 10 privatizations planned for Dubai, as part of the city’s plans to revive a stock market that has been suffering from declining liquidity. Dubai had staged just one IPO in the five years before DEWA’s listing, and the share sale was seen as an important test for the city’s capital markets.

Shortly before the IPO, the corporation almost tripled the size of the offer to 18% of the share capital after demand greatly exceeded the number of shares on offer. It took orders worth $86 billion from investors including BlackRock Inc. and Vanguard Group Inc.

Emirates Central Cooling Systems Corp. It is estimated to be the next government company to go public. Bloomberg reported that a company known as Empower is looking to raise as much as $700 million in an IPO that could list as soon as November.

(Update with old share trading dividend in second paragraph.)

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