Saudi Arabia’s largest independent power plant developer is considering an initial public offering (IPO) “sooner rather than later” to help feed its growing need for cash, chief executive officer Paddy Padmanathan said.
ACWA Power International needs about US$800 million a year in cash to help fund its goals for developing US$6 billion to US$8 billion a year of electricity generation plants, Padmanathan estimated.
Additional funds could come from partners taking equity stakes in projects, from additional debt and a revolving credit line ACWA has.
Padmanathan declined to put a date on when the IPO might go forward.
ACWA sold US$814 million of bonds last year and sees an IPO as a way to “add a new currency” to its efforts to finance the business.
The move would also increase the transparency of the closely held company, which is based in Riyadh, and has 37 operating power plants across eight nations.
“An IPO is an option we will definitely utilize,” Padmanathan said in an interview in Bloomberg’s office in London. “We want to bring the public into this business. We have a very capital hungry company.”
Padmanathan said that since ACWA delivers electricity and water, there is an “implicit contract” to be transparent in the way it works to communities it serves.
Filing regular accounts required by stock exchanges would further that goal, he said.
ACWA’s operating projects are in Saudi Arabia, the United Arab Emirates, Oman, South Africa, Jordan, Morocco, Turkey and Bulgaria. With nine additional plants it has under development ACWA will add Oman and Egypt to the list of countries in which it works.
Founded in 2004, the company has 22.5 gigawatts of operating projects that required US$30.5 billion of investment.
Padmanathan estimates those facilities produce almost USUS$300 million a year of cash for ACWA.
The company brings in partners to help fund the equity, but wants to maintain operational control at all its plants.
“We are an operator to the core,” he said. “We don’t need to own 100 percent, but that’s the model we’re going to carry on.”
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