Largest Saudi IPO Since Aramco Has Investors Scrambling For More

(Bloomberg) – Investment bankers have set aside a few weeks to generate interest in Saudi Arabia’s $ 1 billion initial public offering from Aramco. They only needed hours before they had excess orders.

ACWA Power International’s $ 1.2 billion IPO, priced later this month, sparks great interest among investors looking for exposure to companies deemed essential to the kingdom’s plans to diversify its economy away from oil. The listing had initial demand in the billions of dollars and advisers must limit allocations to institutional investors, according to people with direct knowledge of the transaction.

As Aramco’s record-breaking 2019 IPO offered investors a share of Saudi Arabia’s oil wealth, ACWA is suspending access to renewable energy and hydrogen projects the nation sees as its to come up. ACWA, half-owned by the Saudi PIF fund, is expected to complete at least 70% of the kingdom’s renewable projects by 2030 and is expected to meet its own goal of net zero emissions ahead of an existing 2050 target.

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 on its growth plans and triple in size over the next 7-10 years. “

PIF, which increased its stake in the Riyadh-based power producer late last year, is not looking to sell any of its shares, people said, asking not to be identified while speaking beforehand. the end of the offer.

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

The offer comes at a time when Saudi firms backed by the kingdom’s $ 430 billion fortune fund are leading new offerings on the Middle East’s largest stock exchange, where IPOs in the region are rare. . Aramco’s record offering, which raised around $ 30 billion in 2019, paved the way for more Saudi firms.

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

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