Saudi fund PIF con­sid­ers buy­ing stake in ACWA Fund in­vites in­vest­ment banks for ad­vice

Kuwait Times - - BUSINESS -

Saudi Ara­bia’s main sov­er­eign wealth fund, Pub­lic In­vest­ment Fund (PIF), is con­sid­er­ing buy­ing a stake in Riyadh-based ACWA Power, which op­er­ates power and wa­ter plants around the world, sources fa­mil­iar with the mat­ter told Reuters. PIF, which al­ready owns a 13.7 per­cent stake in ACWA in­di­rectly through a sub­sidiary, invited in­vest­ment banks last month to pitch for the role of ad­vis­ing it on a po­ten­tial ACWA deal, ac­cord­ing to four sources, de­clin­ing to be named due to the sen­si­tiv­ity of the mat­ter.

Talks are still at a pre­lim­i­nary stage, and nei­ther party has ap­pointed an ad­vi­sor, said two of the sources, who are based in the Gulf. Pri­vately held ACWA de­scribes it­self as an in­vestor, de­vel­oper, co-owner and op­er­a­tor of a port­fo­lio of plants in Europe, Asia and Africa that gen­er­ate more than 23 gi­gawatts of power and pro­duce 2.5 mil­lion cu­bic me­tres of de­sali­nated wa­ter a day.

The fund de­clined to com­ment, when con­tacted by Reuters yes­ter­day. ACWA also de­clined to com­ment. PIF’s in­vest­ment strat­egy aims to help the gov­ern­ment di­ver­sify the Saudi econ­omy away from oil into power and other sec­tors. PIF’s sub­sidiary San­abil In­vest­ments, which fo­cuses on mak­ing di­rect equity in­vest­ments in lo­cal com­pa­nies and projects, ac­quired a 13.7 per­cent stake in ACWA in Jan­uary 2013.

It is un­clear how the new in­vest­ment will be made at this stage: whether it would be struc­tured as a stake in­crease by San­abil or whether the PIF will take a di­rect stake, a third source said.

One of the Gulf-based sources said PIF would like to in­crease its to­tal hold­ing to any­where be­tween 25 and 35 per­cent. The fund has also been be­hind a num­ber of do­mes­tic in­vest­ments in re­cent months - own­er­ship of a stalled fi­nan­cial dis­trict project in Riyadh is to be trans­ferred to the fund, and the fund is ex­pected to make an in­vest­ment into King Ab­dul­lah Eco­nomic City.

PIF is seen as a key driver of the king­dom’s Vi­sion 2030 plan to di­ver­sify the econ­omy, with the author­i­ties aim­ing to turn it into the world’s largest sov­er­eign wealth fund. Cen­tral to the re­form plan is greater in­volve­ment by the pri­vate sec­tor in the Saudi econ­omy, in­clud­ing in the power sec­tor: it has called on rais­ing the per­cent­age of power plant elec­tric­ity gen­er­a­tion through strate­gic part­ners to 100 per­cent from 27 per­cent cur­rently. —Reuters

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