ACWA Power IPO: Details of the Initial Public Offering and Stock Updates in the

ACWA Power (Global Water and Power Company) was established in 2004 as a joint initiative between the private and public sectors in Saudi Arabia. The company quickly evolved to become a leader in the development of power generation and water desalination plants, with a project portfolio covering Saudi Arabia, the Middle East, Africa, and Central Asia. ACWA Power's business model focuses on developing, owning, and operating power plants (both conventional and renewable) and water desalination plants, often under long-term contracts with government entities. This model provides the company with stability in cash flows and reduces risks associated with short-term market fluctuations. ACWA Power is distinguished by its close relationships with the government sector and its ability to compete in large project tenders, making it a pivotal player in achieving the goals of Vision 2030 for clean energy and economic transformation.

ACWA Power holds special strategic importance for investors and decision-makers in the Kingdom. It is not only one of the largest developers of energy and water desalination but also a model for effective public-private partnerships. With the government's aim to increase the contribution of renewable energy to the national energy mix to over 50% by 2030, ACWA Power occupies a central position in implementing these plans through massive solar, wind, and green hydrogen projects. The company's listing on the Saudi financial market (Tadawul) has provided individual and institutional investors with the opportunity to participate in the company's growth stories, while also enhancing the sector's transparency and attractiveness for local and foreign investments. Furthermore, ACWA Power serves as an example of large companies transitioning to listing to support sustainability goals and diversify the national economy.

The ACWA Power IPO came in response to the Kingdom's vision to activate the stock market and enhance transparency. Following Saudi Aramco's acquisition of 13.33% of the company's shares at the end of 2023, the path was paved for a highly anticipated initial public offering. Data indicates that the offering aimed to distribute between 20% to 30% of the company's shares, with the majority allocated to Saudi individuals and the remainder to local and international institutions. This offering occurred at a time of increasing global interest in renewable energy and sustainability, making the ACWA Power IPO a focal point for investors. The offering process underwent thorough review by the Saudi Capital Market Authority and witnessed wide demand, especially with the entry of strategic investors such as Aramco and local and international funds.

The financial data for ACWA Power following the offering showed steady growth in revenues and net profits. The share price at the end of the third quarter of 2024 was approximately SAR 29.50, with a market capitalization of around SAR 17.7 billion (based on 600 million outstanding shares). The price-to-earnings (P/E) ratio was approximately 19.7, which is within an acceptable range for renewable energy companies, reflecting positive growth expectations. Revenues grew by 15% in the first half of 2024 compared to the same period last year, while net profit increased by about 10%. The dividend policy remains relatively conservative in the early stages, with an expected dividend yield between 1.5% and 2%, until a full financial year is completed post-listing. These indicators position ACWA Power among the largest companies in its sector in terms of size, profitability, and operational sustainability.

The ACWA Power IPO comes at a time of strong growth for the Saudi energy and water sector, driven by Vision 2030 and plans to expand renewable energy. The sector is witnessing competition among large government entities (such as the Saudi Electricity Company and the National Water Company) and private, regional, and global companies. ACWA Power has a competitive advantage in public-private partnership (PPP) projects and independent power producer (IPP) contracts, offering integrated solutions with high efficiency. Competition is also intensifying with the entry of global companies into tenders for massive projects, especially in solar, wind, and water desalination. However, ACWA Power's ties to long-term contracts with government entities remain one of the key factors for its financial stability.

The years 2023-2024 witnessed several strategic developments for ACWA Power, the most significant being Saudi Aramco's acquisition of a 13.33% stake in the company for nearly SAR 5 billion. This move bolstered investor confidence in the company, and the share price rose following the announcement of the deal. At the same time, ACWA Power received strong credit ratings from agencies such as Fitch and Moody's, adding further credibility to its financial position. The company expanded into green hydrogen projects, notably its partnership in the NEOM renewable energy project, and secured new contracts to establish solar and wind power plants in Saudi Arabia and other countries. All these developments confirmed ACWA Power's leading position in the sector and opened new avenues for regional and international expansion.

ACWA Power manages a broad portfolio of major projects in renewable energy (solar, wind, green hydrogen) and traditional and modern desalination plants. The NEOM green hydrogen project has emerged as one of the largest energy transformation projects globally, alongside massive solar (such as the solar highlands) and wind projects (the Raash project). The company has also invested in international expansion, particularly in Asia and Africa, through solar projects in India and plants in Egypt and Jordan. This geographical and technological diversity provides ACWA Power with flexibility in facing market fluctuations and enhances its ability to generate sustainable cash flows.

ACWA Power's performance is influenced by several key factors, including government policies related to renewable energy, financing costs and interest rates, technological developments, and regional and global competition. Strong government support and policies promoting clean energy provide a favorable environment for the company's growth, while fluctuations in interest rates or fuel prices may affect operating and financing costs. Additionally, technological advancements play a crucial role in reducing operating costs and increasing the feasibility of renewable energy projects. On the competition side, the entry of new players into the market may pressure profit margins in some future projects.

Following the listing, ACWA Power did not announce significant dividends immediately, but the management indicated its intention to distribute a portion of net profits after completing the first full financial year. The expected dividend yield is projected to range between 1.5% and 2% in the initial phase, with the possibility of increasing it in the future as financial stability improves. The company is currently focused on strengthening its financial position and repaying part of its long-term debts, in addition to investing profits in expansion and executing new projects. This cautious financial direction aligns with the growth strategy of companies in the infrastructure and renewable energy sector, where the priority for expansion and operational sustainability outweighs immediate distributions.

ACWA Power has a strong governance structure that includes representatives from major shareholders (including the Public Investment Fund and Aramco) and independent members from both the public and private sectors. The company is committed to transparent practices in financial disclosure and periodic reporting, which enhances investor confidence and meets the requirements of the Saudi Capital Market Authority. In 2024, some adjustments were made to the board of directors with the addition of new members reflecting the development and expansion strategy. The management also places significant importance on environmental and social sustainability, working on implementing eco-friendly projects and adhering to international governance standards.

Despite the wide opportunities available to ACWA Power, there are several challenges to consider: First, some of the company's traditional plants are exposed to fluctuations in global fuel prices, which may affect profit margins. Second, increasing competition in the renewable energy sector may lead to declining prices and profit margins in some future contracts. Third, changes in interest rates or deteriorating sovereign ratings may increase financing costs. Finally, the sustainability of demand for electricity and water partially depends on national economic growth, and any economic slowdown may impact consumption rates and delay government project implementations. It is important for investors to monitor these factors when evaluating the company's performance.

For accurate and reliable information about the ACWA Power IPO and stock performance, it is recommended to rely on official sources such as the company's website (acwapower.com), which provides periodic financial reports and investor bulletins. Additionally, the Saudi Capital Market Authority (Tadawul) publishes the official prospectus and all relevant disclosures about the IPO and daily prices. For continuous updates, economic news agencies like Reuters and Bloomberg provide analyses and opinions on the company's developments and the market. Credit rating agencies (Fitch and Moody's) are also an important source for assessing financial credibility and future growth plans. Reviewing these sources helps investors form a comprehensive and neutral view of the company's position in the market.