The International Company for Power and Water Projects (ACWA Power), a leading developer, investor and operator of power generation and desalinated water plants worldwide, Thursday announced its intention to proceed with an Initial Public Offering (IPO) and list its shares on the Main Market of the Saudi Stock Exchange (Tadawul).
The Capital Market Authority (CMA) on June 20, 2021, approved the ACWA Power’s application for the Initial Public Offering of 81,199,299 new ordinary shares, representing 11.1% of the company’s enlarged share capital.
The final price at which all subscribers in the offering will purchase shares will be determined at the end of the book-building period.
Founded in Riyadh in 2004, ACWA Power is a leading private developer, owner and operator of long-term contracted power generation and desalinated water projects worldwide, which continuously optimizes its portfolio.
ACWA Power today has 64 projects in operation, construction or advanced development in 13 countries across three continents, with a total project cost of SR248 billion ($66 billion).
The company’s operational capacity across all markets currently provides 20.3 GW of electricity and 2.8 million m3 per day of desalinated water.
Once existing projects under construction and in advanced development are completed and brought into operation within the next four years, the company will double its operational power generation capacity to 41.6 GW and more than double its operational desalinated water production capacity to 6.4 million m3 per day.
As a homegrown company, ACWA Power’s portfolio in Saudi Arabia, including assets currently under construction or in advanced development, represents an estimated 24% of Saudi Arabia’s gross power generation capacity and 49% of the country’s water desalination capacity.
With a pioneering mindset and mastery of the most sophisticated technologies, the Company is focused on enabling and driving the energy transition through investment expansion in greenfield and/or brownfield projects in renewable energy and green hydrogen.
In addition to its existing portfolio of operational, under construction or advanced development assets, the Company’s growth opportunities include a short-term pipeline of more than 85 identified projects representing an overall potential capacity of 68 GW of power and 9.5 m3 per day of water from desalination assets coming up for tender or currently under negotiation.
An additional growth driver is the development of 70% of Saudi Arabia’s 2030 renewable energy target of 58.7 GW under the National Renewable Energy Programme, which ACWA Power is developing with the Public Investment Fund (PIF), a majority shareholder in the company, under a strategic framework agreement.
Overall, there are future greenfield growth opportunities in the company’s target markets of approximately 385 GW. Considering ACWA Power’s industry-leading average bid-win ratio of 68%, the Company believes it is strongly positioned to capture its fair share of these opportunities.
Out of the company’s gross power capacity, including assets under operation, construction or in advanced development, 77% utilise low-CO2 power technologies, including solar, wind and gas.
The share of renewables in ACWA Power’s total gross power capacity is currently 33%, which is targeted to increase to 50% by 2030 as the company makes headway towards its net zero emissions target by 2050.
The company believes that the PIF strategic framework agreement will expedite the achievement of its 50% renewable target.
Mohammad A. Abunayyan, chairman of the Board of Directors, ACWA Power, said: “In this increasingly power-deficient and fresh-water constrained world, we are proud to positively impact millions of lives every day by delivering essential power and water.
Since ACWA Power’s inception 17 years ago in Saudi Arabia, our mission has been to provide these life-sustaining utilities in a reliable and responsible manner, at low cost.
“Over the past decade, our business model has gone from strength to strength, and today ACWA Power emerges as not only a power generation and desalination champion at home in the Kingdom but also as a company enabling and driving the worldwide transition to a greener, cleaner future.”
He added: “We are deeply honored that the Public Investment Fund has entrusted us with spearheading the implementation of the National Renewable Energy Program and proud to be a national champion, making tangible contributions to Vision 2030 initiatives.
“Affordable, low-carbon power generation and water desalination is critical for the sustainable development of economies. It is a privilege to be among the leaders in this field, relied upon by governments around the world to provide vital resources to their citizens.
“We believe the IPO will give new investors a unique opportunity to participate in the exciting opportunities that lie ahead.”
Paddy Padmanathan, chief executive officer, ACWA Power, said: “A historic shift towards renewable energy sources is under way. We at ACWA Power are honored to be at the forefront of this transition, championing a decarbonised and more sustainable future to support economic growth and social prosperity.
“For nearly two decades, we have worked to develop our robust business model, which is underpinned by long-term contracts and diversified assets across geographies and technologies.
“Combined with robust strategic partnerships, we are now well-positioned to capture significant opportunities in Saudi Arabia as well as in attractive markets globally, including utility-scale green hydrogen.
“Successively breaking the world record for the lowest water and solar tariffs during the last decade, we deliver power and water reliably, responsibly and affordably, and without compromising environmental stewardship, social accountability and good governance, to a rapidly increasing number of people worldwide.”
Key investment highlights
ACWA Power maintains a strong financial position as a result of its established strategy and solid competitive strengths, driven by a contracted, diversified, resilient and visible cash flow base with steady projected growth; high liquidity reinforced by mostly untapped corporate revolver facilities; low parent leverage allowing significant debt raising capacity; and superior returns across the lifecycle of projects with a strong income stream from continuing operations.
ACWA Power’s overall strategy is to be at the forefront of the energy transition by delivering power, desalinated water and green hydrogen reliably and responsibly at low cost in the Kingdom of Saudi Arabia, the wider GCC and attractive high-growth markets based on a de-risked and contracted business model.
The key tenets of the company’s strategy are:
1. Leadership in KSA and in selected high-growth markets
2. Focus on driving the energy transition and wider environmental, social, and corporate governance (ESG) agenda in all targeted markets
3. De-risked business model underpinned by diversified long-term contracts
4. Utilisation of centralised and synergetic expertise to optimise portfolio operations and economics via ACWA Power’s fully owned operation and maintenance company, NOMAC
5. Application of a total return concept focused on extracting economics across the value chain to offer optimal “win-win" tariffs
The company’s competitive strengths include its project development mastery underpinned by the “ACWA Power Total Solution”, a high-quality contracted portfolio with diversified cashflows, its “Develop-Invest-Operate-Optimize” business model configured to extract returns across asset lifecycles, a seasoned management team with a strong in-house multi-disciplinary team of experts, as well as a critical mass in high-growth markets with a visible growth pipeline and long-term buy-in from strategic shareholders. — SG