Dubai air-conditioning provider Empower has halted plans to go public citing adverse market conditions, the utility's chief executive said on Tuesday, in a blow to the emirate's attempts to diversify its stock exchange.
Oil is thought to account for only about 5 percent of Dubai's economy, but the slump in crude prices has nevertheless sent the share prices of Dubai-listed companies tumbling. The main stock index, in which real estate and bank stocks dominate, is down 40 percent from a 2014 peak.
"Empower is a company that must go public ... we have studied this, we came up with the result that we will (launch an) IPO (initial public offering) but the market conditions are not encouraging," Ahmed bin Shafar, Empower's chief executive told a news conference to announce the company's annual results.
"We are freezing the decision until we see the right time."
Empower, a joint venture between Dubai's monopoly electricity and water provider and a company owned by the emirate's ruler, made an annual net profit of 516 million dirhams ($141 mln) in 2015, up 27 percent year-on-year. Revenue rose 12 percent to 1.7 billion dirhams.
Shafar forecast Empower's 2016 profit would be 600 million dirhams, while revenue would reach 1.8 billion dirhams.
The company's cooling capacity increased 6.7 percent to 1.12 million refrigeration tons 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 percent 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.
Its current liabilities total 1.5 billion dirhams after it paid off 580 million 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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