Tuesday 26, June 2018 by Bloomberg

Huge Saudi generator considering IPO 'sooner rather than later'

 

ACWA sold $814 million of bonds last year and sees an IPO as a way to “add a new currency” to its efforts to finance the business

Saudi Arabia’s largest independent power plant developer is considering an initial public offering “sooner rather than later” to help feed its growing need for cash, according to the company’s chief executive officer.

Paddy Padmanathan estimated ACWA Power International needs about $800 million a year in cash to help fund its goals for developing $6 billion to $8 billion a year of electricity generation plants. Additional funds could come from partners taking equity stakes in projects, from additional debt and a revolving credit line ACWA has. He declined to put a date on when the IPO might go forward.

ACWA sold $814 million of bonds last year and sees an IPO as a way to “add a new currency” to its efforts to finance the business. The move would also increase the transparency of the closely-held company, which is based in Riyadh, and has some 37 operating power plants across eight nations.

“An IPO is an option we will definitely utilise,” Padmanathan said in an interview in Bloomberg’s office in London. “We want to bring the public into this business. We have a very capital hungry company.”

Padmanathan said that since ACWA delivers electricity and water, there’s an “implicit contract” to be transparent in the way it works to communities it serves. Filing regular accounts required by stock exchanges would further that goal, he said.

ACWA’s operating projects are in Saudi Arabia, the United Arab Emirates, Oman, South Africa, Jordan, Morocco, Turkey and Bulgaria. With nine additional plants it has under development ACWA will add Oman and Egypt to the list of countries in which it works.

Founded in 2004, the company has 22.5 gigawatts of operating projects that required $30.5 billion of investment. Padmanathan estimates those facilities produce almost $300 million a year of cash for ACWA. The company brings in partners to help fund the equity but wants to maintain operational control at all its plants.

“We are an operator to the core,” the executive said. “We don’t need to own 100 percent, but that’s the model we’re going to carry on.”

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