Largest Saudi IPO since Aramco on Monday for Riyadh trading debut

The $1.2 billion IPO attracted interest from investors seeking exposure to a company believed to be key to the kingdom’s plans to diversify its economy away from oil. Initial demand was several billion dollars and advisors had to limit institutional investor allocations.

Riyadh-based ACWA, which is half-owned by the kingdom’s state fund PIF, is selling an 11.1% stake at 56 riyals ($14.93) apiece, the top end of the offering. 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 most popular market for IPOs in the Middle East in recent years, although Abu Dhabi is catching up.

ACWA Power International, one of the kingdom’s premier vehicles for building renewable energy projects, on Tuesday priced its IPO at the high end of an original range, aiming to raise $1.2 billion. It will be the largest offering in Riyadh since Saudi Aramcos’ listing in 2019.

While Aramcos’ record 2019 IPO offered investors a slice of Saudi Arabia’s oil wealth, ACWA dangles access to the renewable energy and hydrogen projects the country sees as its future. ACWA, which is half-owned by the 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 target before 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 agricultural and technology company that participated in the bidding process. We expect the company to deliver on its growth plans. triple in 10 years.”

The PIF, which increased its stake in the Riyadh-based energy producer late last year, has no plans to sell its shares, the people said, asking not to be identified while speaking until the offer is completed.

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

The offer comes at a time when Saudi Arabian companies, backed by the $430 billion state fund, are leading new offerings on the Middle East’s largest stock exchange, where IPOs in the region have been scarce. Aramco’s record 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 is building a $5 billion plant powered entirely by solar and wind that will be one of the world’s largest producers of green hydrogen when it opens in 2025 in the planned megacity of Neom, as part of its first steps in the shaping a global hydrogen market. ACWA is a third partner in the project.

There are many more IPOs in the pipeline, including the exchange itself, the specialty chemicals business of Saudi Basic Industries Corp. and the freight company Saudi Arabian Logistics Co.