Emirates central cooling system corporation PJS announces offer price range and start of subscription period for initial public offering

Emirates Central Cooling Systems Corporation PJSC (“Empower” or the “Company”), the world’s largest district cooling services provider and a clear leading player in the Dubai district cooling market with a targeted market share of approximately 80% of the total connected capacity by the end of 2022, announces the price range and start of the subscription period for its initial public offering (“IPO” or the “Offering”) on the Dubai Financial Market (“DFM”).

His Excellency Ahmad Bin Shafar, Chief Executive Officer of Empower, said:

“Empower has a proud history of pioneering sustainable cooling technology in the UAE and has played an integral role in supporting the growth of Dubai. As the largest district cooling provider in the world, Empower is inherently linked towards Dubai’s wider energy transition goals, including the Dubai Integrated Energy 2030 Strategy. Backed by strong Government policies as well as our leading district cooling services, we are confident in scaling practical and sustainable solutions that will benefit our wide customer base. Since announcing our intention to float on the DFM, we are extremely pleased to have received strong interest from investors. 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.”

DETAILS OF THE OFFER PRICE RANGE

The price range for the Offering has been set at between AED 1.31 and AED 1.33 per share. The total Offering size is expected to be between AED 1,310m (c.US$ 357m) to AED 1,330m (c.US$ 362m), implying a market capitalisation at listing of between AED 13,100m (c.US$ 3,567m) and AED 13,300m (c.US$ 3,622m).

Based on the dividend policy approved by the Board of Directors, which is expected to be a minimum dividend amount of AED 850m paid in 2023 or AED0.085 per share, the offer price range implies a dividend yield within the c.6.4% to c.6.5% range.

10% of the total issued share capital of Empower (equivalent to a total of 1,000,000,000 shares) are being made available via the Offering, with the Selling Shareholders reserving the right to amend the size of the Offering at any time prior to the end of the subscription period at their sole discretion, subject to applicable laws and the approval of the SCA.

All of the Shares are existing shares, with DEWA and Emirates Power selling 7% and 3% of the total issued share capital respectively. The Company will not receive any proceeds from the Offering. Following the Offering, and subject to the size of the Offering not being increased, the Selling Shareholders (DEWA and Emirates Power) will continue to hold a stake of 63% and 27% respectively.

SUBSCRIPTION PROCESS

The Offering will comprise of:

• A public offering (the “UAE Retail Offering”) to individual and other investors in the UAE (as defined in the UAE Prospectus and referred to as “First Tranche” subscribers);
• An offering to certain investors (i) outside the United States and in reliance on Regulation S of the U.S. Securities Act of 1933 (as amended) and (ii) pursuant to the Exempt Offer (the “Qualified Investors Offering”, as described in the UAE Prospectus and referred to as “Second Tranche” subscribers).

Further, as part of the Qualified Investors Offering, and in accordance with both the Companies Law and the Dubai Law,

• Up to 5% of the Offering will be reserved for offer to the Emirates Investment Authority (the “EIA”) and
• Another 5% of the Offering will be reserved for offer to the Pensions and Social Security Fund of Local Military Personnel (the “Fund”).

The UAE Retail Offering subscription period is expected to run from 31 October 2022 to 7 November 2022, with the Qualified Investors Offering subscription period expected to run from 31 October 2022 to 8 November 2022.

The final offer price will be determined through a book building process and is expected to be announced on 9 November 2022.

The completion of the Offering and Admission is currently expected to take place on 15 November 2022, subject to market conditions and obtaining relevant regulatory approvals in the UAE, including approval of Admission to listing and trading on the DFM.

The details of the Offering are available in the UAE Prospectus with respect to the UAE Retail Offering, and in an English-language International Offering Memorandum with respect to the Qualified Investors Offering. The UAE Prospectus and the International Offering Memorandum are available under the Key Documents section on empower.ae/ipo

CORNERSTONE INVESTORS

On 31 October 2022, the Company entered into cornerstone investment agreements with the UAE Strategic Investment Fund (through Emirates NBD AM SPC), Shamal Holding and The Abu Dhabi Pension Fund (ADPF) (together, the “Cornerstone Investors”), pursuant to which each of the Cornerstone Investors severally (and neither jointly nor jointly and severally) has committed to purchase shares in the Qualified Investor Offering at the final offer price. In aggregate, the Cornerstone Investors have committed up to AED 335m to the IPO with their shares subject to a 180-day lock-up arrangement, following listing.

Emirates NBD AM SPC is acting on behalf of the UAE Strategic Investment Fund, which was established to act as a strategic long-only investor in key Dubai IPOs. The UAE Strategic Investment Fund is a segregated portfolio of Emirates NBD AM SPC managed by Emirates NBD Asset Management, which is one of the largest and longest established asset managers in the Middle East with a recognised track record of investing in, amongst other asset classes, listed equities within the MENA region via segregated mandates and mutual funds.

Shamal Holding is a diversified investment firm that manages a unique portfolio of investments that are strategically aligned with Dubai's long term ambitions.

The Abu Dhabi Pension Fund (ADPF) is an important Abu Dhabi Government entity, set up in 2000 to manage contributions, pensions and end-of-service benefits for UAE nationals working in or retired from the government and private sectors in the Emirate of Abu Dhabi and their beneficiaries.

Moelis & Company UK LLP DIFC Branch has been appointed as the Independent Financial Advisor to Empower. 

Citigroup Global Markets Limited, Emirates NBD Capital PSC, and Merrill Lynch International have been appointed as joint global coordinators (the “Joint Global Coordinators”) and EFG-Hermes UAE Limited (acting jointly with EFG Hermes UAE LLC) has been appointed as a joint bookrunner (together with the Joint Global Coordinators, the “Joint Bookrunners”).

Emirates NBD Bank PJSC has been appointed as the Lead Receiving Bank. Abu Dhabi Islamic Bank PJSC, Ajman Bank, Commercial Bank of Dubai, Dubai Islamic Bank, Emirates Islamic Bank, First Abu Dhabi Bank, Mashreq Bank, MBank and Sharjah Islamic Bank have also been appointed as Receiving Banks.

The Internal Sharia Supervision Committee of Emirates NBD Bank PJSC has issued a pronouncement confirming that, in its view, the Offering is compliant with Shariah principles. Investors should undertake their own due diligence to ensure that the Offering is Shariah compliant for their own purposes.