Saudi Arabia’s leading developer ACWA Power successfully raised $746 million through a senior, unsecured floating Sukuk rate issuance with a 7-year tenor, under the Shariah-compliant Mudaraba-Murabaha structure, as the company continues to diversify its sources of funding to support its growth.
The issuance marks the company’s maiden entry into Saudi debt capital markets and saw significant interest from fund managers, government funds and insurance companies accounting for approximately 30 percent of the issuance and resulting in an oversubscription of 1.8 times over the issue size.
Paddy Padmanathan President & CEO ACWA Power
“The success of the issuance is proof of the wider market’s faith in KSA’s bond market and ACWA Power’s strong credit fundamentals, which have attracted a diverse pool of sophisticated investors. The issuance is also a vote of confidence from investors in our ability to capture large opportunities in Saudi Arabia and other growth markets.”
Companies in the Gulf have been taking advantage of low rates to raising debt as the region emerges from an economic downturn caused by the COVID-19 pandemic and last year’s oil price plunge.
Debt market issuance in the Gulf this year is expected to be in line with 2020’s total of $250 billion, but for a greater proportion of this to be issued by the corporate sector, emerging markets specialist Franklin Templeton said.
ACWA Power operates in 13 countries in the Middle East, Africa and South-East Asia. It has a portfolio of 64 assets with a total investment of $66 billion, producing 42 gigawatts of power and 6.4 million cubic meters per day of desalinated water.
The transaction is also ACWA Power’s first since Saudi’s sovereign wealth fund, the Public Investment Fund (PIF), became a 50 percent shareholder in the company last year.
The sukuk issuance “marks a new phase in diversifying our company’s funding sources to cater for future growth, reinforcing our strong track record in delivering power and desalinated water to communities in the kingdom and around the world”, Kashif Rana, chief financial officer at ACWA Power, said.
HSBC Saudi Arabia and Samba Capital acted as joint lead managers and bookrunners for the sukuk, while Norton Rose Fulbright provided legal counsel.
