Tuesday, October 26, 2021

Largest Saudi IPO since Aramco to debut in Riyadh on Monday

The $ 1.2 billion IPO has sparked interest from investors looking for exposure to a company seen as key to the kingdom’s plans to diversify its economy away from oil. Initial demand amounted to billions of dollars and advisers had to limit allocations to institutional investors.

Riyadh-based ACWA, half-owned by the kingdom’s sovereign wealth fund PIF, is selling an 11.1% stake at 56 rials ($ 14.93) each, the high end of the offering. The company will be valued at $ 10.9 billion and PIF will continue to hold a 44% stake after the IPO. Hottest market

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Riyadh has been the hottest market for IPOs in the Middle East in recent years, although Abu Dhabi is catching up.

ACWA Power International, one of the kingdom’s main vehicles for building renewable energy projects, on Tuesday set its IPO at the top of an original range, seeking to raise $ 1.2 billion. It will be the largest bid in Riyadh since Saudi Aramcos listed in 2019.

As Aramcos’ record-breaking 2019 IPO offered investors a share of Saudi Arabia’s oil wealth, ACWA is suspending access to renewable energy and hydrogen projects the nation sees as its future. ACWA, half-owned by the Saudi PIF fund, is expected to complete at least 70% of the kingdom’s renewable energy projects by 2030 and expects to meet its own goal of net zero emissions ahead of an existing 2050 target.

The IPO is expected to be significantly oversubscribed, ”said Naveed Naz, financial controller of AlJammaz Group, a Riyadh-based family-owned agriculture and technology company that participated in the bidding process. We expect the company to be able to achieve its growth plans. and triple in size over the next 7-10 years. “

PIF, which increased its stake in the Riyadh-based power producer late last year, is not looking to sell any of its shares, people said, asking not to be identified while speaking before. that the offer is not over.

The company will be heavily oversubscribed due to the nature of the offering, which depends on raising capital and not exiting or selling, ”said Thamer Al Saeed, chief investment officer of Mada Investment Co.

The offer comes at a time when Saudi companies backed by the kingdom’s $ 430 billion fortune fund are leading new offerings on the Middle East’s largest stock exchange, where IPOs in the region are rare . Aramco’s record-breaking bid, which raised around $ 30 billion in 2019, paved the way for more Saudi firms.

The kingdom also plans to rule the $ 700 billion hydrogen market. Its construction of a $ 5 billion plant powered entirely by the sun and wind that will be one of the largest manufacturers of green hydrogen in the world when it opens in the planned megalopolis of Neom in 2025, as part of of its first steps in shaping a global hydrogen market. ACWA is a third party partner of the project.

Many more IPOs are underway, including the exchange itself, the specialty chemicals business of Saudi Basic Industries Corp. and the freight company Saudi Arabian Logistics Co.

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