International Company for Water & Power Projects (ACWA Power) a leading developer, owner and operator of independent power generation & water desalination plants, and Arab Petroleum Investments Corporation (APICORP), a multilateral development bank established in 1975 by the 10 member states of the Organization of Arab Petroleum Exporting Countries (OAPEC), announced the signing of a sale and purchase agreement in respect of an 8% effective stake in Shuqaiq Independent Water & Power Project (Shuqaiq IWPP) in Saudi Arabia.
Under the terms of the agreement, which is subject to the satisfaction of conditions precedent involving certain consents, APICORP shall purchase a 13.33% equity stake in Shuqaiq International Water Company (SIWEC), thereby giving them an 8% effective stake in Shuqaiq IWPP.
Shuqaiq IWPP is one of ACWA Power’s early greenfield developments in Saudi Arabia. Located on the on the western shores of Saudi Arabia, 130 km north of Jazan, the plant has a capacity to generate 850 MW of power and 212,000 cubic meters of desalinated water per day. The project achieved financial close in 2007 and started commercial operations in 2011. It has a 20-year power and water purchase agreement with Water & Electricity Company, Saudi Arabia.
Prior to this transaction, ACWA Power had a 40% effective stake in the project, after having acquired a 6% effective stake in 2014 from Mitsubishi Corporation, Japan, to add to its original 34% effective stake in the project.
This transaction complements the memorandum of understanding for a co-investment initiative signed by APICORP and ACWA Power in 2014, suggesting close collaboration in various projects in the fields of power generation and water desalination across the core geographies of ACWA Power.
Commenting on the transaction, Dr. Raed Al Rayes, Deputy Chief Executive and General Manager of APICORP, said: "Shuqaiq IWPP ranks among the major developments in Saudi Arabia’s water and power sector and makes significant contributions to meeting the country’s rising demands in this field. We are proud to support ACWA Power in their growth plans through this transaction, which enhances and diversifies at the same time our equity portfolio by increasing exposure to the power generation sector that has stable profit rates and low risk. We look forward to working with our partners at Shuqaiq IWPP and to developing similar partnerships with companies in the same sector.”
Rajit Nanda, Chief Investment Officer of ACWA Power, said: “This transaction is a reflection of the confidence that our partners have in ACWA Power, and in the way we develop, build and operate our assets. APICORP has been a valued partner for many years, and this transaction capitalizes on the alignment of the business objectives of APICORP and ACWA Power.”
Kashif Rana, Chief Financial Officer of ACWA Power, said: “This transaction is a result of ACWA Power’s evolving portfolio and corporate finance strategy. We are focusing on ensuring that our portfolio carries an optimum risk-return profile, while having a balance sheet that being efficient capital-structure wise will also support our growth plans.”