Dubai Electricity and Water Authority (DEWA) recently announced a strategic acquisition, purchasing the entire 24% stake of Emirates Central Cooling Systems (EMPOWER.DU) held by Dubai Holding for approximately 5.18 billion dirhams (around $1.41 billion). This deal elevates DEWA’s ownership of EMPOWER to a commanding 80% stake, reflecting its commitment to expanding its presence in the district cooling sector.

Details of the Acquisition

The acquisition was finalized at an implied share price of 2.16 dirhams, representing a 14% premium over EMPOWER’s most recent closing price. This premium underscores DEWA’s aggressive strategy to dominate the district cooling market amid rising demand in Dubai’s rapidly growing real estate sector. As the emirate continues to evolve, energy-efficient solutions like centralized cooling systems are becoming increasingly vital to infrastructure development.

Strategic Importance of District Cooling

DEWA’s Managing Director, Saeed Mohammed Al Tayer, emphasized that the acquisition is a significant step toward delivering greater value to stakeholders. District cooling systems are particularly appealing because they utilize centralized plants to supply chilled water via extensive piping, consuming far less energy compared to traditional air conditioning systems. This aligns perfectly with Dubai’s sustainability goals and commitment to reducing energy consumption.

Shifts in Investment Strategy

Dubai Holding, the previous stakeholder, divested its position through a subsidiary called Emirates Power Investment LLC. The company has indicated that this move is part of a broader strategy to pursue a globally diversified investment portfolio. This shift hints at the company’s intention to explore new avenues, potentially focusing on projects that align more closely with international investment trends.

Empower’s Market Position

EMPOWER, which became publicly listed on the Dubai Financial Market in November 2022—an offering that saw overwhelming demand—commands over 80% of Dubai’s district cooling capacity. The company provides its services to numerous commercial, residential, and mixed-use projects across the emirate, proving its integral role in Dubai’s urban landscape. The remaining 20% of shares will continue to be traded on the stock exchange, keeping the company accessible to other investors.

Overall, DEWA’s acquisition of EMPOWER represents an important move in the context of Dubai’s energy landscape. The transaction is poised to not only enhance DEWA’s capabilities but also support the emirate’s ambitious development goals, paving the way for a more sustainable and energy-efficient future.