Saudi Arabia’s ACWA Power Co. has finalized an agreement to acquire power and water assets in Kuwait and Bahrain for a total of SAR2.6 billion ($693 million). This deal encompasses a combined-cycle power generation portfolio with a capacity of 4.6 gigawatts and desalination capabilities amounting to 1.114 million cubic meters per day. In a statement, ACWA Power detailed that the acquisition includes associated operations and maintenance companies.
The assets are being purchased from Kahrabel FZE, a subsidiary of France’s Engie. ACWA Power indicated that the buyer will consist of newly established subsidiaries formed post-signing of the agreement. The financing for the acquisition will come from the company’s internal cash reserves as well as external funding sources.
Structure of the acquisition process
The acquisition process is structured to include an 18 percent stake in the Az Zour North power plant, along with 45 percent stakes in both the Al Ezzel and Al Dur power plants. Additionally, there will be a 30 percent stake in the Al Hidd power plant, all of which are located in Bahrain. A newly created company under ACWA Power will also take over the operation and maintenance firms for these facilities, including a 50 percent stake in the operation and maintenance company for Az Zour North and full ownership (100 percent) of the company for Al Ezzel.
Key power generation and desalination assets
The acquisition covers several vital power generation and water desalination assets in Kuwait and Bahrain. Notably, these include the Az Zour North power plant in Kuwait, which has a capacity of 1,520 MW and produces 486,000 m³ of desalinated water daily. The Al Ezzel power plant has a capacity of 940 MW, while the Al Dur and Al Hidd power plants in Bahrain have capacities of 930 MW and 1,220 MW, respectively, with desalination outputs of 218,000 m³ and 409,000 m³ per day.
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Strengthening market position
This deal aims to promote ACWA Power’s standing as a global leader in water desalination and to enhance its footprint in the power generation sector. It is strategically designed to improve the company’s cash flow and profitability through established contracts. The targeted assets in this acquisition are fully operational and maintained to meet the highest standards.
Supporting profitability and operational capabilities
Moreover, this acquisition will aid the company in achieving its objectives of boosting profitability and free cash flow for equity stakeholders, while simultaneously reinforcing its leadership in both the power generation and water desalination industries. This move will also expand the company’s operational and maintenance capabilities. Notably, this acquisition signifies ACWA Power’s initial foray into the Kuwaiti market with a stake in the Az Zour North power plant, aligning with its strategic initiatives to grow its presence in the regional energy and water sector.
