Saudi Arabia’s Acwa Power successfully raised 2.8 billion Saudi riyals ($746 million) through the issuance of a 7-year sukuk, or Islamic bond, as the company continues to diversify its sources of funding to support its growth.
The issuance was the first the company has completed in the Saudi Arabian market and benefited from "significant interest from fund managers, government funds and insurance companies", the company said in a statement on Monday evening. The offer was 1.8-times oversubscribed.
“The success of the issuance is proof of the wider market’s faith in KSA’s bond market and Acwa Power’s strong credit fundamentals, which have attracted a diverse pool of sophisticated investors,” Paddy Padmanathan, president and chief executive of Acwa Power, said. “The issuance is also a vote of confidence from investors in our ability to capture large opportunities in Saudi Arabia and other growth markets.”
Companies in the Gulf have been taking advantage of low rates to raise debt as the region emerges from an economic downturn caused by the Covid-19 pandemic and last year's oil price plunge. Emerging markets specialist Franklin Templeton said this week it expects debt market issuance in the Gulf this year to be in line with last year's total of $250bn, but for a greater proportion of this to be issued by the corporate sector.
Acwa Power operates in 13 countries in the Middle East, Africa and South-East Asia. It has a portfolio of 64 assets with a total investment of $66bn, producing 42 gigawatts of power and 6.4 million cubic metres per day of desalinated water.
The transaction is also Acwa Power’s first since Saudi’s sovereign wealth fund, the Public Investment Fund, became a 50 per cent shareholder in the company last year.
The sukuk issuance “marks a new phase in diversifying our company’s funding sources to cater for future growth, reinforcing our strong track record in delivering power and desalinated water … to communities in the kingdom and around the world”, Kashif Rana, chief financial officer at Acwa Power, said.
HSBC Saudi Arabia and Samba Capital acted as joint lead managers and bookrunners for the sukuk, while Norton Rose Fulbright provided legal counsel.
Earlier this year, Acwa Power secured financing for a $1bn power project it is developing in Uzbekistan as part of its strategy to boost its renewable energy portfolio in the Central Asian republic.
The company also signed an agreement with Dubai-based Neutral Fuels to supply net-zero biofuel – a clean form of fuel that lowers emissions – to power the kingdom's Red Sea tourism project on thecoast.
UAE currency: the story behind the money in your pockets
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North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
Abu Dhabi card
5pm: Handicap (TB) Dh100,000 2,400m
5.30pm: Wathba Stallions Cup Handicap (PA) Dh 70,000 2,200m
6pm: Abu Dhabi Fillies Classic Prestige (PA) Dh110,000 1,400m
6.30pm: Abu Dhabi Colts Classic Prestige (PA) Dh110,000 1,400m
7pm: Handicap (PA) Dh85,000 1,600m
7.30pm: Maiden (PA) Dh80,000 1,600m
The National selections:
5pm: Valcartier
5.30pm: AF Taraha
6pm: Dhafra
6.30pm: Maqam
7pm: AF Mekhbat
7.30pm: Ezz Al Rawasi
MATCH INFO
Syria v Australia
2018 World Cup qualifying: Asia fourth round play-off first leg
Venue: Hang Jebat Stadium (Malacca, Malayisa)
Kick-off: Thursday, 4.30pm (UAE)
Watch: beIN Sports HD
* Second leg in Australia scheduled for October 10
Country-size land deals
US interest in purchasing territory is not as outlandish as it sounds. Here's a look at some big land transactions between nations:
Louisiana Purchase
If Donald Trump is one who aims to broker "a deal of the century", then this was the "deal of the 19th Century". In 1803, the US nearly doubled in size when it bought 2,140,000 square kilometres from France for $15 million.
Florida Purchase Treaty
The US courted Spain for Florida for years. Spain eventually realised its burden in holding on to the territory and in 1819 effectively ceded it to America in a wider border treaty.
Alaska purchase
America's spending spree continued in 1867 when it acquired 1,518,800 km2 of Alaskan land from Russia for $7.2m. Critics panned the government for buying "useless land".
The Philippines
At the end of the Spanish-American War, a provision in the 1898 Treaty of Paris saw Spain surrender the Philippines for a payment of $20 million.
US Virgin Islands
It's not like a US president has never reached a deal with Denmark before. In 1917 the US purchased the Danish West Indies for $25m and renamed them the US Virgin Islands.
Gwadar
The most recent sovereign land purchase was in 1958 when Pakistan bought the southwestern port of Gwadar from Oman for 5.5bn Pakistan rupees.
UNSC Elections 2022-23
Seats open:
- Two for Africa Group
- One for Asia-Pacific Group (traditionally Arab state or Tunisia)
- One for Latin America and Caribbean Group
- One for Eastern Europe Group
Countries so far running:
UAE currency: the story behind the money in your pockets
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
Sukuk explained
Sukuk are Sharia-compliant financial certificates issued by governments, corporates and other entities. While as an asset class they resemble conventional bonds, there are some significant differences. As interest is prohibited under Sharia, sukuk must contain an underlying transaction, for example a leaseback agreement, and the income that is paid to investors is generated by the underlying asset. Investors must also be prepared to share in both the profits and losses of an enterprise. Nevertheless, sukuk are similar to conventional bonds in that they provide regular payments, and are considered less risky than equities. Most investors would not buy sukuk directly due to high minimum subscriptions, but invest via funds.
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Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
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