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Empower delays IPO, cites harsh market conditions

Dubai headquartered district cooling company is putting brakes to its earlier plans for an IPO due to current market uncertainties

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Ahmad bin Shafar, CEO, Empower
Ahmad bin Shafar, CEO, Empower

Dubai headquartered district cooling company is putting brakes to its earlier plans for an IPO due to current market uncertainties, a top executive at the company has said.

Empower is ranked the largest district cooling company in the world with an installed capacity of more than 1 million refrigeration tonnes (RT).

Last year, the company announced that it was studying an initial public offering in a move would potentially boost Dubai’s attempts to diversify its stock market.

“We are freezing our earlier position until we see the right time,” said Ahmed bin Shafar, CEO, Empower while announcing the company’s annual results.

“Empower is a company that must go public ... we have studied this, we came up with the result that we will IPO but the market conditions are not encouraging," he said.

The crash in oil prices have severely affected share prices of Dubai-listed companies with the main stock index, in which real estate and bank stocks dominate, is down 40% from a 2014 peak, according to Reuters.

Empower recorded an annual net profit of Dh516mn ($141 mn) in 2015, up 27% year-on-year. Revenue rose 12% to Dh1.7bn. Shafar forecast Empower's 2016 profit would be Dh600mn, while revenue would reach Dh1.8bn.

The company's cooling capacity increased 6.7% to 1.12 million RT over the same period. It was providing air conditioning to 810 buildings by the end of 2015, up from 746 a year earlier, Shafar said, predicting Empower would connect a further 52 buildings in 2016.

The company requires 1.2 billion dirhams in new funding to pay for projects under construction, of which 80% will come from bank borrowings and the rest from company funds, Shafar said.

He said the company was talking to local and international banks to secure this money.

Empower typically borrows over six years, but sometimes syndicated loans differ with lenders seeking to restructure a facility after about half the money had been repaid, reported Reuters.

Its current liabilities total 1.5 bn dirhams after it paid off 580 mn of debt last year.

The company has halted plans to expand into Qatar and Saudi Arabia after the drop in oil prices led to state spending cutbacks in those countries, Shafar said.

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