Acwa Power raises $747m through maiden sukuk issuance

Acwa Power raises $747m through maiden sukuk issuance

15 Jun 2021

Saudi Arabia’s Acwa Power raised SR2.8bn ($747m) through its maiden 7-year sukuk issuance, which was issued under the Sharia compliant Mudaraba-Murabaha structure

 

Saudi Arabia’s Acwa Power raised SR2.8bn ($747m) through its maiden 7-year sukuk issuance, which was issued under the Sharia compliant Mudaraba-Murabaha structure.

The sukuk issuance is Acwa Power’s first issuance in Saudi debt capital markets. The issuance gathered interest from fund managers, government funds and insurance companies – which together accounted for about 30 per cent of the issuance. The sukuk was oversubscribed 1.8 times over the issue size.

Initial price guidance had been pegged at 100-125 basis points per annum plus 6-month SAIBOR. The oversubscription enabled Acwa Power to tighten pricing by 25 bps pa. The final 100bps pa + SAIBOR is the lowest spread secured in Saudi Arabia’s capital markets by a corporate or bank issue since 2017, according to Acwa Power.

The sukuk transaction is Acwa Power’s fist since Saudi Arabia’s sovereign wealth entity Public Investment Fund (PIF) became a 50 per cent shareholder in the group in 2020.

HSBC Saudi Arabia and Samba Capital acted as joint lead managers and bookrunners for the sukuk issuance, with HSBC Issuer Services also acting as Sukuk holders’ Agent and Payment Administrator. Norton Rose Fulbright (NRF)’s London and Riyadh offices acted as issuer counsel while the JLMs were advised by Allen & Overy and Khoshaim & Associates. 

Acwa Power is the largest developer, investor and operator of power generation and desalinated water production plants in the Middle East and North Africa (Mena) region. The developer also has assets in Africa, Central Asia and Southeast Asia. Acwa Power’s portfolio contains 64 assets with an investment value of SR248bn ($66bn), which produce 42GW of power and 6.4 million cubic metres a day of desalinated water.

Acwa Power was recently awarded contracts for two record breaking solar tariffs in Saudi Arabia.

The lowest tariff of $cents1.04 a kilowatt hour ($c/kWh) was awarded for the 600MW Fasiliyah PV independent power producer (IPP) project, the largest project under the second round of the kingdom’s National Renewable Energy Programme (NREP).

The power purchase agreement (PPA) for the Fasiliyah IPP was signed on 8 April, according to sources close to the project.

Also on 8 April, Saudi Arabia’s sovereign wealth fund Public Investment Fund (PIF) announced that it had signed the PPA with an Acwa Power consortium for the 1.5GW Sudair PV IPP – a project that had been directly negotiated with the developer through PIF’s solar programme.

The tariff of $c1.239/kWh is the second lowest PV solar tariff recorded, only beaten by the Fasiliyah IPP.

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