ACWA Power to Go Public, Expected to Drive RE Boom in Saudi Arabia

Highlights :

  • The power producer, which will be 44% owned by Saudi Arabia’s sovereign wealth fund after the IPO, said it’ll sell shares at 56 riyals ($14.93) apiece after institutional part of the offering ended.
  • It will raise $1.2 billion for ACWA and value the company at $10.9 billion.

Saudi Arabia’s ACWA Power shares will debut on the main market of the Saudi Stock Exchange on Monday, October 11, according to a bourse filing, which is expected to translate into a larger push for renewables in the Kingdom.

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The utility developer announced an international initial public offering (IPO) plan in September, aiming to raise USD 1.2 billion, the biggest offering in Riyadh since the listing of Aramco.

The power producer completed the institutional book-building process for its IPO, receiving bids worth 248 times what it is issuing, according to a filing on the Tadawul stock exchange. The company drew orders of SR1.127 trillion ($300.4 billion) from institutional investors, to which it is allocating 90 percent of the 81.2 million shares on offer, said Riyad Capital, Citigroup Saudi Arabia, JP Morgan Saudi Arabi and NATIXIS, the financial advisers, lead managers, bookrunners and underwriters for the IPO.

Half-owned by the Kingdom’s Public Investment Fund, the company is selling 81.2 million shares at SR56 each or an 11.1 percent stake. The institutional tranche, which makes up 90 percent of the IPO, was 248 times oversubscribed, attracting SR1.127 trillion.

ACWA is transforming itself for low carbon manufacturing and claimed to double its energy production output over the next five years, with renewables accounting for a majority share.

In April this year, ACWA Power has announced the opening of a utility-scale solar renewable energy project in the country. The 300MW Sakaka PV independent power producer (IPP), which was built with an investment of SAR1. 2bn ($319m), was inaugurated by Crown Prince Mohammed bin Salman of Saudi Arabia.

In August, the company announced the financial close for the 1500 MW Sudair Solar plant, the largest PV station in Saudi Arabia. It is a key project under the Public Investment Fund (PIF) renewable energy program that aims to support the country’s ongoing energy transition and diversification, and to deliver 70% of the country’s renewable energy under the National Renewable Energy Program (NREP).

ACWA has also announced that at the beginning of 2022, the company will issue green bonds for financing its renewable energy projects. It already has 5 projects certified for green finance, which together will require around $10 billion in financing.

Additionally, this year, the Crown Prince unveiled a campaign to have 50% of electricity generation from renewables in Saudi Arabia. The kingdom also plans to reach 58.7 GW of cumulative renewable energy capacity by 2030 and 27.3 GW by 2024. This signals a turn towards renewables taken by Middle East superpowers, of which exports are dominated by oil. ACWA will help develop 70% of projects in Saudi Arabia. Whether the country can deliver on is energy transformation policy will be heeded around the world, but it does seem that ACWA will play a key role in the upcoming efforts towards energy transition, especially following its IPO.

The stock will have plus/minus 30 percent daily price fluctuation limits and plus/minus 10 percent static price fluctuation limits, according to a statement on the Saudi Stock Market (Tadawul).

These fluctuation limits will be applied during the first three days of listing, and from the fourth trading day onwards, the daily price fluctuation limits will revert to plus/minus 10 percent and the static price fluctuation limits will no longer apply.

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