Dubai utility surges after pulling off year’s second-biggest IPO

Dubai Electricity & Water Authority jumped in its trading debut after raising $6.1 billion in the world’s second-biggest initial public offering this year.
Shares of Dubai’s main utility rose 20% to 2.98 dirhams from the offer price of 2.48 dirhams, which was the top end of the marketed range. The IPO valued DEWA at $33.8 billion.

The deal is the latest sign of feverish appetite for IPOs from the Arab Gulf. DEWA almost tripled the size of its offer to 18% in the face of huge demand, drawing orders worth $86 billion, excluding cornerstone and strategic investors.

Russia’s invasion of Ukraine has shuttered global IPO markets, already buckling under the weight of surging inflation and monetary policy tightening. The Middle East sidestepped the worst of the volatility, while soaring energy prices boosted cash reserves for local investors, who have been keen to put the money to work.

DEWA priced its IPO for an implied dividend yield of 5%, a boon as rising interest rates make companies that provide steady income more attractive. The utility has a monopoly in the city and is seen as a way to gain exposure to Dubai’s economic and demographic growth potential.