The Public Investment Fund acquires significant stake in ACWA Power

Press Releases
04 June 2018 Riyadh, KSA

The Public Investment Fund of Saudi Arabia and International Company For Water And Power Projects (“ACWA Power” or the “Company”), a leading developer, owner, and operator of power generation and water desalination plants, today jointly announce the acquisition a significant stake by the Public Investment Fund (“PIF”) in ACWA Power.

As a result of the investment, PIF will become a 15.2 per cent direct shareholder in ACWA Power and, by taking into account the 9.78 per cent ownership of its wholly-owned subsidiary Sanabil Direct Investments Company (“Sanabil”), PIF’s total shareholding directly and indirectly represents a twenty-four point nine eight (24.98%) percent equity interest in ACWA Power.

The entire investment will be in the form of a capital increase and the proceeds will be used to support ACWA Power’s growth strategy and investment plan.

Since its formation in 2004, ACWA Power has been a notable Saudi success story, becoming a leading private sector power and desalinated water developer and producer in the Kingdom in addition to rapid expansion into new markets. In the Kingdom of Saudi Arabia, with 54 per cent of the ACWA Power’s gross power generation capacity and 93 per cent of its gross water desalination capacity, ACWA Power is able to provide 14 per cent and 33 per cent of the power and desalinated water consumption in the Kingdom of Saudi Arabia respectively. Now also firmly established in geographies beyond the Kingdom of Saudi Arabia, ACWA Power has a total of 40 power and/or desalination projects in operation and under construction, and an additional 7 power and/or desalination projects in advanced development.

The investment is in line with the Pubic Investment Fund Program, to unlock new sectors and industries, to support and accelerate the development of innovative Saudi businesses and achieve strong long-term returns. It also underlines the strategic support PIF has provided to ACWA Power in funding its growth and PIF’s role in unlocking the broader sector as a significant investor in a number of utilities businesses.

The Company’s role as the leading private sector investor in and operator of critical power and water infrastructure is underpinned by today’s announcement, which builds on a strong relationship with PIF first established in 2013 when Sanabil invested in ACWA Power. The additional investment in ACWA Power reiterates PIF’s endorsement of the successful strategy and business model of ACWA Power.

ACWA Power also has a track record of innovation in renewable energy, recently achieving the lowest solar tariff in the world for the 300MW Sakaka PV project (US Cents 2.34/kWh), the first ever solar power project in Saudi Arabia.

Commenting on the investment, the Public Investment Fund said:

“We see exciting growth potential for ACWA Power and are very pleased to support its development. ACWA Power is a strategic long-term investment for PIF which has a proven asset base and demonstrated track record of leading innovative projects domestically and internationally.”
Mohammad Abunayyan, Chairman of ACWA Power, commented:

“I am delighted to welcome the PIF in its own capacity as a significant shareholder of ACWA Power culminating a process where the offer was received in early 2017. Their endorsement underlines the central role we play in the Saudi economy and our successful international expansion all geared towards achieving the objectives of Vision 2030. Furthermore, the investment is a testimony to the strong growth ACWA Power has already demonstrated and the solid financial track record the Company has established. It is also a recognition of the tremendous and tangible growth opportunities the company can access both in the domestic and international markets. 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.”
Paddy Padmanathan, Chief Executive Officer of ACWA Power, said:

“The investment by PIF reflects its commitment to the Kingdom of Saudi Arabia’s energy transition plans of diversification of the fuel mix in power generation including the introduction of significant renewable energy capacity and the expansion of much needed additional power generation and desalinated water production capacity. While ACWA Power will continue to focus on reliably delivering electricity and desalinated water at the lowest cost, the ACWA Power also intends to leverage its domestic and international market-leading position to play a pivotal role in the Kingdom of Saudi Arabia’s energy transition plan, as evidenced by its recent successful bid for the Kingdom of Saudi Arabia’s first utility scale solar photovoltaics tender in the Kingdom of Saudi Arabia in February 2018.”
HSBC acted as the sole financial advisor to PIF and JP Morgan acted as the sole financial advisor to ACWA Power on the transaction.