SAUDI FUND INCREASES HOLDING IN ACWA POWER TO NEAR 25%
Renewables investment comes as kingdom aims to free up crude for export and diversify economy
Saudi Arabia’s sovereign Public Investment Fund (PIF) has increased its stake in Riyadh renewables developer Acwa Power, the companies said.
PIF’s total stake in Acwa Power is now close to 25 per cent, with its latest 15.2 per cent direct stake in addition to its existing 9.78 per cent stake through its wholly-owned subsidiary Sanabil Direct Investments Company, the firms said on Thursday. Acwa Power’s chairman Mohammad Abunayyan confirmed that PIF’s offer was made in early 2017.
“The PIF reinforces what is already a high-quality institutional shareholder base which includes the Public Pension Agency of Saudi Arabia and World Bank’s International Finance Corporation,” Mr Abunayyan said.
The investment by the Saudi sovereign fund in one of the largest regional power developers comes amid the rollout of a renewables programme by the world’s biggest oil exporter. Saudi Arabia is expected to tender over 4 gigawatts of solar and wind projects as it looks to free up more crude for export and diversify its economy further.
PIF’s investment will come in the form of a capital increase, with the proceeds to be spent on Acwa Power’s growth strategy and investment plans, the companies said.
HSBC advised PIF on the deal, while JP Morgan acted as the sole financial adviser for the renewables firm.
The equity increase by PIF comes as Acwa Power looks to leverage more funds to grow across the region, tapping into an appetite for renewables, which according to GE is set to grow at 24 per cent compound annual growth rate by 2025.
Acwa Power is also widely expected to file for an initial public offering in Saudi Arabia as well as an international market. Chief executive Paddy Padmanathan said last month that the company would look at the flotation “sooner rather than later” to help meet its need for cash. He declined to indicate a timeline.
The company needed about $800 million (Dh2.93bn) annually in cash to help fund $6 billion to $8bn worth of electricity generation projects, he said.
Future projects could involve equity stakes from partners, with other funding coming from additional debt and the company’s revolving credit line.
The Saudi developer last year sold $814m in bonds and viewed future IPO plans as a way to “add new currency” to finance its business plans, said Mr Padmanathan.
Acwa Power has developed projects across the Middle East, including the fourth phase of the Sheikh Mohammed bin Rashid Solar Park, as well as renewables schemes in Jordan and North Africa. The company is also taking a leading role in the alternative power generation sector in Saudi Arabia
The kingdom last year established a renewables department within the energy ministry, which has largely overseen hydrocarbons and is expected to tender about $7bn worth of solar and wind projects this year.
Acwa Power has had early success in the Saudi renewables drive, with a consortium led by the company chosen to develop the country’s first-ever solar plant, a $302m facility at Sakaka, which is being built on the basis of an independent power producer model.
Acwa Power is also bidding for the kingdom’s first wind project, a 400 megawqatts scheme in the northern Dumat Al Jandal region.