PIF-Backed ACWA Power to Seek Over $1 Billion in Saudi IPO

(Bloomberg) -- Saudi Arabia’s ACWA Power International is close to announcing an initial public offering to raise more than $1 billion, according to people familiar with the matter.

A Riyadh listing may value the utility at $10 billion or more, said the people, who asked not to be named. An announcement may be made as soon as this week, they said.

ACWA Power declined to comment.

While ACWA runs many natural gas-fired power plants, the Saudi government plans to make it the main vehicle for the kingdom’s major solar and green-hydrogen projects.

ACWA is part of a consortium, along with U.S.-based AirProducts and Chemicals Inc., developing a $5 billion plant that will export green hydrogen from the new city of Neom. It’s also building a renewable power project for the kingdom’s Red Sea Development Co.

Saudi Arabia’s Public Investment Fund raised its stake in ACWA Power to 50% last year, saying the move was part of the wealth fund’s strategy to support renewable energy developments. The PIF may not sell down its stake if an IPO goes ahead, said the people.

No final decision has been made and ACWA may decide against the transaction, they said. The PIF didn’t immediately respond to a request for comment.

IPO Hub

A $1 billion deal would be one of the largest listings in the kingdom and comes at a time of renewed investor appetite for new offerings.

Riyadh has been the hottest market for IPOs in the Middle East over the past two years, thanks mostly to local retail and institutional investors. Tanmiah Food Co., Theeb Rent A Car Co. and AlKhorayef Water & Power Technologies Co. were the latest in a clutch of share sales in the kingdom this year. 

Other PIF-backed companies including stock exchange Tadawul and digital security firm Elm are expected to sell shares on the Saudi bourse this year. Saudi Telecom Co. -- owned by the wealth fund -- and Saudi Basic Industries Corp. may also offer stakes in their subsidiaries.  

The pipeline of deals is a sign that state-controlled firms in Saudi Arabia are increasingly looking at ways to take advantage of soaring investor demand for new offerings while also raising money to help fund efforts to diversify the economy away from oil.

(Updates with other IPOs and planned listings starting in ninth paragraph.)

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