Exclusive: ACWA Power subscription funds exceed 2021 Saudi budget expenditure

The financial advisors on the proposed initial public offering (IPO) of International Company for Water and Power Projects (“ACWA Power”), revealed the completion of the book-building process for the Participating Parties tranche, in which the offering has been covered around 248 times through bids amounting to SAR 1,127 billion.

Riyad Capital, Citigroup Saudi Arabia, J.P. Morgan Saudi Arabia Company and Natixis Saudi Arabia Investment Company, in their capacities as Financial Advisors, Bookrunners and Underwriters on the proposed initial public offering (“IPO”) of International Company for Water and Power Projects (“ACWA Power”) announced the results.

ACWA Power thus sets a new record after the institutional nook-building process of SR471 billion announced days ago by the Arabian Internet and Communications Services Company (solutions by stc), which outperformed all previous subscription in the Saudi Stock Exchange, Tadawul in terms of aggregated funds.

According to monitoring and documentation made by “Maaal”, the Saudi Arabian leading online business daily, the funds raised from the ACWA Power subscription in the institutional part are sufficient to purchase all of the company’s SR731.09 million issued shares approximately 27.5 times. The market value of the company’s issued shares (based on the offering price of SR56) stands at SR40.94 billion.

According to figures announced on Thursday by the Ministry of Finance, funds collected from the institutions subscription to ACWA Power shares exceed the total actual expenditure in the Saudi Arabia’s budget for 2020 which amounted to SR1.076 trillion, projected for 2021 of SR1.012 trillion.

In fact, with the exception of 2014, where expenditure stood at SR1.14 trillion, it historically exceeds the volume of annual expenditures in Saudi budgets

The funds collected from the institutions subscription in “ACWA Power” exceed the total amount of SR917 billion in the subscription of both Aramco and Solutions by stc.

It can buy 40% of the shares listed on the market, except for Aramco

The funds collected from the institutions’ subscription to “ACWA Power” are sufficient to buy 39.9% of the total shares listed on the financial market except of Aramco.

At the same time, it is sufficient to buy shares of the largest sectors in the market solely, which is 1.34 times as against the market value of the basic materials sector, including the petrochemical giant SABIC, of SR841 billion, and 1.22 times as much as the market value of the banking sector of SR924 billion.

Excluding these two sectors with Aramco shares, the funds collected by the institutions for ACWA Power subscription will be 1.06 times the market value of the remaining shares in the market of SR1.06 trillion.

The volume of subscription turnout reflects the investors’ confidence in the company’s financial position and its ability to sustain growth especially at the local level, as the volume of funds collected at the local investor level amounted to SR1.075 trillion, roughly equal to the amount of expenditure in the 2020 budget, while Gulf investors subscribed for SR36 billion, and foreign investors subscribed for SR16 billion.

The institution’s subscription is a currently unpaid paper subscription, which comes with a guarantee from funding sources that funds shall be paid according to what will actually be allocated to the institutions.