ACWA Power, a leader in energy transformation and water desalination, announced a new strategic move that strengthens its local asset portfolio, as the company signed a Share Purchase Agreement (SPA) to acquire the entire stake of Water and Electricity Holding Company “Badil” in Shuaiba Water and Electricity Company.
According to a statement released by the company on the Saudi Stock Exchange (Tadawul) website, the deal is valued at SAR 843.3 million and aims to acquire a 32% stake in the target company. It is worth noting that Badeel is a wholly-owned subsidiary of the Public Investment Fund (PIF), a strategic partner of ACWA Power.
Details of the deal and its financial impact
Under this agreement, ACWA Power's stake in Shuaiba Water and Electricity Company will increase from 30% (currently indirectly) to 62%, giving it a majority stake and greater control over the project. The acquisition will be executed through Al Waha Projects, an investment arm wholly owned by ACWA Power.
The company explained that the deal will be self-financed, expecting that this acquisition will have a positive impact on the financial statements, as it will lead to an additional contribution to net recurring income and free cash flows for shareholders, given that the project enjoys stable and guaranteed cash flows under long-term contracts.
The importance of the Shuaiba project and its technical specifications
The Shuqaiq power plant is a cornerstone of the water and electricity infrastructure in Saudi Arabia. Located on the west coast, it plays a pivotal role in meeting the growing demand for water and power. The plant boasts a massive production capacity of:
- Generating electricity with a capacity of 900 megawatts.
- Water desalination plant with a production capacity of 880,000 cubic meters per day.
The project is characterized by very limited operational risks, as it is linked to a Water and Power Purchase Agreement (PWPA) that is in effect until 2030, which guarantees stable returns from the main buyer of production.
Strategic and economic context
This acquisition comes in line with Saudi Arabia’s drive to enhance the efficiency of the energy and water sector within Vision 2030. ACWA Power is a key partner in this vision, as the company seeks to maximize the return on its existing assets.
The deal reflects the complementary relationship between ACWA Power and the Public Investment Fund (PIF), with both parties aiming to restructure ownership to enhance operational and investment efficiency. The Kingdom's desalination sector is the largest globally, and the Shuqaiq plants are a vital lifeline for the western region, including Makkah and Jeddah, giving this transaction a strategic dimension that transcends purely financial considerations.
It is worth noting that the completion of the deal is still subject to fulfilling the preconditions contained in the agreement, which include obtaining the necessary regulatory approvals from the relevant authorities in the Kingdom.
