ACWA Power Plans to Raise Funds From Sukuk to IPO for Solar Push

ACWA Power International plans to sell shares and Islamic bonds as the Saudi Arabian developer of generation facilities joins Middle East companies seeking to raise funds for expansion.

The company may offer $800 million from the sale of sukuk this year before an initial public offering on the Saudi exchange at the end of 2014, Chief Executive Officer Paddy Padmanathan told reporters in Dubai today. ACWA aims to start its first solar project in the kingdom this year, he said.

Saudi Arabia, the world’s largest crude oil exporter, plans to invest $100 billion in solar expansion. The kingdom is looking to renewable energy to help meet power demand, that Padmanathan says is growing nearly 10 percent a year, and to save crude for export.

ACWA’s sukuk would add to Islamic bond sales in the kingdom that are dominating issuance in the Gulf Cooperation Council. Saudi Arabia’s General Authority of Civil Aviation, Almarai Co. and Saudi Binladin Group raised a combined $4.8 billion in Islamic debt last quarter. IPOs are also seeing a revival in the region, with Qatar Petroleum and fast-food chain Just Falafel said to plan share sales.

ACWA is also waiting to close a $1.2 billion financing package for the Rabigh II power plant on the Red Sea coast, Padmanathan said. The company is competing with Electricite de France SA (EDF) to build a 100 megawatt plant in the city of Mecca, with municipal authorities set to make a decision on the winner of the $230 million project this year, he said.

Mecca would become the first Saudi city to operate a utility-scale plant generating power from renewables. The government-mandated King Abdullah City for Atomic and Renewable Energy aims to build 41,000 megawatts of solar plants over the next two decades, which would account for one third of the capacity the country is forecast to have by that time.

To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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