As the world awaits the COP26 conference at the end of the month, Saudi Arabia is taking meaningful and measurable actions to diversify its economy away from oil. Monday's listing of ACWA Power International – the Kingdom's primary vehicle for building renewable energy projects – is a step in the right direction. ACWA, partly owned by Saudi's sovereign wealth fund PIF, will deliver at least 70% of the country's renewable energy projects by 2030. One of these projects is a $5b solar and wind-powered hydrogen plant in the futuristic city of Neom.
The IPO successfully raised $1.2b from investors, with ACWA's shares up 30% on Monday morning's first trading hours. The company offered 11.1% of its existing shares, reducing PIF's stake to 44%. In addition to this, ACWA will offer 4.14 million shares to employees of the company and subsidiaries.
Why it matters
ACWA's IPO is Saudi Arabia's biggest since Aramco's $29.4b public offering in 2019. Saudi Arabia's stock market is flaming hot, having risen more than 33% this year. Just like it happened with ACWA, companies going public on the Saudi exchange are constantly being oversubscribed. At least 40 other IPOs are in the pipeline for 2021, including Tadawul's.
