Gulf News - Dh7b+ DEWA IPO comes with a low offer price and easy subscription processes

Dubai: Keep the offer price low and make it easy for a maximum number of investors to take part – that’s the strategy DEWA has adopted with its IPO. At between Dh2.25-Dh2.48 a share, the DEWA share sure is accessible, with banks and other lenders willing to extend whatever additional cash wannabe investors need to subscribe.

Even the processes have been made simpler. “Subscribers can do online registrations on DFM – through DFM E-subscription - by uploading their Emirates ID and bank account details,” said Vijay Valecha, Chief Investment Officer at Century Financial. “Moreover, most banks are now assisting with the same to make it an even more of a straight-forward process.

Minimum and max

The minimum subscription for retail investors is set at Dh5,000 and with additional ones to be made in increments of Dh1,000 or more. There is no upper ceiling set on the subscriptions.

Each subscriber in the First Tranche will have a ‘guaranteed minimum allocation of 1,000 shares’.

An 8% allocation

Retail investors will have access to 8 per cent of the shares being put up for subscription, which works out to 260 million shares of the 3.25 billion being issued. These represent the ‘first tranche’ investors, and all must hold a valid DFM Investor Number (NIN).

“DEWA is expected to be Dubai’s biggest listing since DP World in 2007 and is expected to raise over $2 billion,” said Junaid Ansari, Senior Vice-President of Investment Strategy and Research at Kuwait-based Kamco Invest.

“Based on average share turnover of around 60 per cent of free float shares for companies listed on DFM last year, DEWA is expected to add an additional S1.5 billion to $2 billion in volumes this year. However, new listings tend to trade in higher quantities - so the actual volume in DEWA could be much higher than this base expectation. Inclusion in international (stock market) benchmarks could add additional liquidity.”

April 6 dateline

DEWA’s final offer price will be announced April 6. With a dividend yield of 5 per cent or higher, based on initial projections, individual and institutional interest in the IPO will hit its stride in the next 48 hours and maintain that pace all the way up to April 2 and April 5, which are the dates for the closing of subscription to these categories.

So, what should the investor mantra be for DEWA? "It is important for investors to diversify their portfolios into different sectors and be able to rotate allocation during different economic environments,” said Tariq Qaqish, CEO at UAE's Salt Fund Placement. “

“It is also attractive for investors who are looking at a stable dividend play in a currency that is pegged to the dollar. International investors will be happy to allocate too. In a very low yield environment, a 5.5 per cent yield is considered very attractive, especially there is no currency risk associated."

The DEWA IPO adopts multiple ways to attract the widest possible subscriber base. These include:

Keeping the share offer price at under Dh2.50.

Promising an attractive dividend yield of 5 per cent or higher.

Simplifying the process of applying using the DFM Investor Number (NIN).

Ensuring equitable allocation to investors.