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ACWA Power International, Saudi Arabia’s first $1 billion initial public offering since Aramco, is set to start trading in Riyadh on Monday. 

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

Riyadh-based ACWA, half-owned by the kingdom’s sovereign wealth fund PIF, is selling an 11.1% stake at 56 riyals ($14.93) apiece, the top end of the offer range. The company will be valued at $10.9 billion and the PIF will continue to own a 44% stake after the IPO. Hottest Market

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Riyadh has been the hottest market for IPOs in the Middle East over the past years, though Abu Dhabi is catching up.

ACWA Power International, one of the kingdom’s main vehicles for building renewable energy projects, on Tuesday priced its IPO at the top end of an original range, seeking to raise $1.2 billion. It is set to be the biggest offering in Riyadh since Saudi Aramco’s listing in 2019.

While Aramco’s record IPO in 2019 offered investors a slice of Saudi Arabia’s oil riches, ACWA dangles access to the renewable energy and hydrogen projects the nation sees as its future. ACWA, half-owned by Saudi wealth fund PIF, is expected to deliver at least 70% of the kingdom’s renewable projects by 2030 and expects to meet its own net-zero emissions goal before an existing target of 2050.

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 deliver its growth plans and triple in size within the next 7 to 10 years."

The PIF, which boosted its stake in the Riyadh-based energy producer late last year, isn’t looking to sell any of its shares, said the people, asking not to be identified while speaking before the offering is complete.

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

The offering comes at at time where Saudi Arabian companies backed by the kingdom’s $430 billion wealth fund are taking the lead in new offerings on the Middle East’s biggest stock exchange where IPOs across the region have been scarce. The record Aramco offering, which raised about $30 billion in 2019, has paved the way for more Saudi companies to float.

The kingdom also plans to rule the $700 billion hydrogen market. It’s building a $5 billion plant powered entirely by sun and wind that will be among the world’s biggest green hydrogen makers when it opens in the planned megacity of Neom in 2025, as part of its first steps into shaping a global market for hydrogen. ACWA is a one-third partner in the project.

Plenty more IPOs are in the pipeline, including the stock exchange itself, the specialty chemicals business of Saudi Basic Industries Corp. and cargo firm Saudi Arabian Logistics Co.

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