Saturday, Jul 02, 2011
By Angus McDowall
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Acwa Power, the Saudi Arabia-based power and water plant developer, has signed a $300 million loan with four international banks, marking its first foray into the international debt market as it scales up to bid on billions of dollars worth of new projects across the Middle East.
Acwa Power president and chief executive officer Paddy Padmanathan told Zawya Dow Jones in an interview in Dubai this week that the privately-held company may also launch an initial public offering, or IPO, and sell bonds for the first time as early as next year in a bid to expand its footprint in the region's private power and water market.
The loan "is to establish our standalone credibility as a fully fledged, grown-up company. It's a $300 million, five-year facility on our Acwa Power balance sheet--so no shareholder guarantees, no nothing. It's just on our balance sheet," Padmanathan said.
The five-year loan, announced on June 29, was signed with Standard Chartered Bank PLC (SCZ.ZM), Citigroup Inc. (C), Mizuho Financial Group Inc. (8411.TO) and Bank of America Merrill Lynch. The facility closed at $210 million, but has an extendable feature which will take it to $300 million later this year with the likely addition of two more banks, Acwa Power said in an emailed statement.
The loan is for corporate investment purposes outside Saudi Arabia, Padmanathan added.
Acwa Power recently expanded its operations to Oman, Jordan and Turkey, and is bidding for projects in Morocco, Kuwait, the United Arab Emirates and South Africa.
Mideast states, in particular in the Gulf, have seen their electricity and water requirements soar in recent years as governments boost investments in new industries and infrastructure to diversify their economies and to accommodate for growing populations.
Oil-rich Gulf Arab countries such as Saudi Arabia, Oman, Bahrain and Qatar depend on foreign investors and debt funding to build and run their power plants and water desalination facilities under the so-called independent power and water project, or IWPP, model.
Acwa Power, established in 2004 in Riyadh, is competing for large-scale IWPP projects with international companies such as GDF Suez S.A. (GSZ.FR), Marubeni Corp. (MARUY) and Korea Electric Power Corp. (KEP), or Kepco.
Padmanathan said the company would also seek a credit rating in the first quarter of next year and issue a bond soon afterwards, with a move into the equity market later in 2012.
"We will go forward and do some institutional private placement, and then go forward into an IPO the latter part of next year," he said. "That's all increasing capital base. None of our shareholders are leaving. We eat capital, so we need lots of it as we grow."
Saudi Electricity Co., or SEC, on June 1 announced that a consortium led by Acwa Power was its preferred bidder on the Qurayyah independent power project, or IPP. The company has teamed with Samsung C&T Corp. (000830.SE) and Mena Infrastructure Fund for the project, in which financial closure is targeted for the end of August, Padmanathan said.
The multi-billion dollar project will be the seventh IPP finalized in the Middle East's largest economy as it plans to increase capacity by 4,000-5,000 megawatts a year. Acwa Power has won the bids for six of them.
Outside the kingdom, Acwa is preparing to bid in October on the 1,500-MW Az Zour project in Kuwait and the 1,500-MW Hassyan station in Dubai. It also plans to compete in July for the 300-350-MW Jordan IPP III project, while a bid is imminent on a 165-MW solar IPP in Morocco. Padmanathan said he also expects a tender soon on a new IPP in Oman and another solar project in South Africa.
Acwa Power recently bought majority stakes in Jordan's Central Electricity Generating Co. and Oman's Barka I IPP, and aims to reach financial close by the end of the year on the 800-MW Kirikkale IPP in Turkey.
-By Angus McDowall of Dow Jones; +971-4-446-1685, angus.mcdowall@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
02-07-11 0943GMT
